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Stocks Slide as GM Falls Below $2

Stocks declined Thursday, pressured by doubts about whether General Motors can survive and ahead of a hearing with Treasury Secretary Timothy Geithner.

The Dow Jones Industrial Average dropped more than 100 points in morning trading, erasing nearly all of the index's gains from the previous session's rally.

One bright spot on the economic front: Jobless claims dropped by 31,000last week to 639,000, better than the 650,000 economists had expected. Continuing claims dropped by 14,000 to 5.11 million.

Meanwhile, productivity showed a worse-than-expected decline for the fourth quarter, while wages pressures increased significantly. Factory orders fell for a sixth straight month in January.

Investors will be watching two hearings on Capitol Hill: The Senate Banking Committee will assemble to discuss what went wrong with insurance giant AIG and the House Budget Committee will hold a hearing with testimony from Timothy Geithner on President Barack Obama's fiscal 2010 budget.

>> Watch the live streaming video of the AIG hearing

And Atlanta Federal Reserve President Dennis Lockhart will speak about the economic outlook at 12:45 pm in Atlanta, Georgia.

Wall Street also was watching foreign banking moves with some interest. The Bank of England slashed interest rates to a record 0.5 percent and the European Central Bank cut its key rate to 1.5 percent.

General Motors shares dropped below $2 after the automaker said its auditors have again raised questions about its sustainability.

Ford said it would eliminate up to $10.4 billion of its debtby offering debtholders cash and stock instead. And Ford supplier Visteon got a vote of confidence after Ford CEO Alan Mulally said there were no plans to change its arrangement with the former affiliate.

General Electric shares ticked higher after the CFO said on CNBC that concerns over credit exposure from GE Capital were overblown. (GE is the parent of CNBC.)

GE stock has lost so much value that the conglomerate, which once boasted a market cap of half a trillion dollars, is now in danger of falling out of the top 20 biggest companies on the S&P 500. GE's market cap was $70.6 billion as of yesterday's close.

>> The Top 25 Companies by Market Cap

Retail sales remained weak in February but came in better than expected, helped by tighter inventories and milder weather.

Wal-Mart was the biggest percentage gainer on the Dow after the discount giant reported its same-store sales jumped 5.1 percent, more than double of what analysts had expected, and raised its dividend.

Rival Target said its same-store sales fell 4.1 percent, but that was still better than expected.

In other news, Venezuela's President Hugo Chavez pushed on with his so-called socialist revolution by seizing control of a unit of American food giantCargill. The move is a bid to guarantee low costs on food staples like rice.

Bank of America shares tumbled after Change to Win, a group that works with union-affiliated pension funds, called for the ouster of CEO Ken Lewis.

And seven top executives at Merrill Lynch received subpoenas from New York Attorney General Andrew Cuomo, sources familiar with the investigation told CNBC. The investigation deals with bonus payments made in the run up to Bank of America's takeover of Merrill last year.

Elsewhere in the financial sector, Wells Fargo and JPMorgan Chase saw their current ratings come into question by Moody's Investors Service. Moody's indicated the bank’s ratings could be lowered in the near future.

In tech land, Google plans to hoard cash as it battles with the economic downturn, but doesn’t expect the move to hurts revenues, Chief Executive Eric Schmidt said. The Internet search giant plans to build an $8.6 billion cash cushion for “very conservative investments” only.

This Week:

THURSDAY: ExxonMobil analyst meeting; Senate hearing on AIG; Geithner testifies at House budget hearing; Fed's Lockhart speaks
FRIDAY: Jobs report; consumer credit

Send comments to cindy.perman@nbcuni.com.