Stocks rout sends S&P 500 to six-year low

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By Ellis Mnyandu

NEW YORK (Reuters) - Stocks extended their slide on Thursday, sending the benchmark S&P 500 index <.SPX> to its lowest in more than six years, as the latest data showed the economy sinking more and investors worried about possible failures by U.S. automakers without a government bailout.

Government data showing that the number of U.S. workers filing new claims for jobless benefits hit their highest level in 16 years in the recent week diminished the appetite for riskier assets even more, along with worries about the future of Citigroup .

Shares of the major U.S. bank, a Dow component, slid almost 15 percent to its lowest level in more than 13 years as investors fretted about more financial sector losses, while shares of General Motors plunged more than 20 percent and Ford slid more than 15 percent.

The worsening economic picture triggered technical breaches by the major indexes, a move that threatened to unleash more turmoil as the bear-market descent deepens on signs the economy is spiraling into a deep slump. The S&P 500 fell to its lowest level since Oct 2002, and is now 50 percent off its record high hit in October 2007.

U.S. crude futures briefly fell below $50 a barrel for the first time since January 18, 2007.

"The decline in the oil prices is a barometer of more economic sliding globally," said Andrew Kanaly, chairman of Kanaly Trust Company in Houston, Texas.

"All you are left with at this point is how much redemption and forced selling is left out there? This got one rethinking how many times is one going to take a beating before realizing the market isn't going to bounce."

The Dow Jones industrial average <.DJI> slid 214.49 points, or 2.68 percent, to 7,782.79. The Standard & Poor's 500 Index <.SPX> plunged 29.82 points, or 3.70 percent, to 776.76. The Nasdaq Composite Index <.IXIC> slumped 39.64 points, or 2.86 percent, to 1,346.78.

Citigroup shares tumbled 15.3 percent to $5.41 on the New York Stock Exchange, where the stock earlier slid as far as $4.77.

Shares of JPMorgan , another major U.S. bank, were a top drag on the Dow, falling more than 14 percent to $24.14. The S&P 500 index <.GSPF> fell nearly 4 percent.

Saudi Prince Alwaleed bin Talal said he would boost his stake in Citigroup to 5 percent. The news initially sent Citi shares up as much as 6 percent but the boost evaporated.

The drop in oil prices pulled shares of energy companies down, with Chevron Corp shares tumbling 5 percent to $67.18, while those Exxon Mobil Corp declined to 2.6 percent to $71.43.

With Congress winding down its session, the auto makers appeared to have made very little progress in convincing Washington to agree to a $25 billion rescue package that the automakers say is necessary to avert bankruptcy.

Even after two days of pleas for aid by auto executives on Capitol Hill, the fate of General Motors , Ford and Chrysler hangs on the balance. GM's stock tumbled to $1.92 and Ford tumbled to $1.09.

The automotive executives on Wednesday predicted a far-reaching calamity for the U.S. economy without a government lifeline. In other economic news, factory activity in the U.S. Mid-Atlantic region fell to another 18-year low in November.

(Reporting by Ellis Mnyandu; Editing by Kenneth Barry)

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