Dow falls below 9,000 as stocks extend declines

The Dow Jones industrials have fallen below the 9,000 mark, hurt by a steep decline in shares of General Motors Corp. The blue chip index is extending its selling to a seventh straight day Thursday as investors grapple with worries about the credit markets and the economy.

General Motors Corp. tumbled as much as 22 percent, heading for its lowest close in 58 years, and Ford Motor Co. slumped 12 percent. XL Capital Ltd., the Bermuda-based insurer, lost as much as 60 percent on concern investment losses will weigh on results. Exxon Mobil Corp. led theStandard & Poor's 500 Energy Index to its lowest level in two years, while a gauge of financial stocks sank to an almost 12-year low as the three- month Libor rate climbed to the highest of the year.

The S&P 500 retreated for a seventh day, losing 38.46 points, or 3.9 percent, to 946.48 at 3:13 p.m. in New York and capping its longest streak of daily declines since 1996. The Dow Jones Industrial Average declined 292.22, or 3.2 percent, to 8,965.88. The Nasdaq Composite Index decreased 2.3 percent to 1,701.15. Seven stocks fell for each that rose on the New York Stock Exchange.

The S&P 500 extended its 2008 tumble to 36 percent, while the Dow is down 32.7 percent. Both are poised for their worst yearly performances since 1937. Banks and brokerages in the S&P 500 lost 2.3 percent today as short sellers returned to the market following a three-week ban by the Securities and Exchange Commission.

U.S. stocks fell yesterday after Treasury Secretary Henry Paulson said more banks may collapse and unprecedented global interest-rate cuts failed to convince investors the economy will avoid a contraction. Paulson signaled the government may invest in banks as the next step in trying to resolve the deepening credit crisis.

The 37 percent decline from its record a year ago today left the S&P 500 valued at less than 19 times the reported earnings of its companies at the start of trading today, the cheapest since February.

Ford slid 27 cents to $2.39, while GM lost $1.12 to $5.78. The automakers may not receive $25 billion in loan guarantees from the U.S. government in time to help them survive the crises in the credit and equity markets, according to the Globe and Mail newspaper, citing a Citibank Inc. analyst.