US stocks slid on Thursday with the Dow and S&P falling to 12-year lows as General Motors' warning of possible bankruptcy and concerns about the banking system's fate reinforced investors' reluctance to take on risk. The previous session's rally proved fleeting as worries about the financial system's health hit bank stocks again and investors focused on the possibility that troubles in the finance arm of widely held General Electric could lead to a debt rating downgrade for the entire company. GE's stock was down 0.5 percent at $6.66 after falling to its lowest since 1991 a day earlier. Uncertainty about the exposure of US banks to GE remained a significant concern and the S&P financial index fell nearly 10 percent. Shares of Citigroup, once the world's largest bank by market value, fell as low as 97 cents during the session, trading below $1 for the first time. Anxiety rose over whether the bank can be restored to health or whether it will have to be taken over by the government. “The loss of confidence is pervasive. There isn't any magic bullet here that's going to save Citi or Bank of America. The only thing that might save them is if the government comes in and sponsors a bankruptcy,” said John Schloegel, a vice president of Capital Cities Asset Management in Austin, Texas. The Dow Jones industrial average fell 281.40 points, or 4.09 percent, to 6,594.44. The Standard & Poor's 500 Index lost 30.32 points, or 4.25 percent, to 682.55. The Nasdaq Composite Index dropped 54.15 points, or 4.00 percent, to 1,299.59. General Motors shed 15.5 percent to $1.86 after its auditors raised “substantial doubt” about the automaker's viability if it fails to head off losses and stop burning through cash. Investors worry that GM's collapse would send shock waves through the recession-hit US economy, given that it is a major employer and buyer of supplies from auto parts makers. The Nasdaq closed at its loBoth the Dow and S&P 500 are down more than 24 percent for the year so far, with the broad S&P shedding 56 percent from 2007's all
