NEW YORK - Investors fled Wall Street again, driven by worries about the nation's big banks and General Motors Corp.

Stocks ended at 12-year lows yesterday, more than wiping out the previous day's rally. Investors wrestled with more disheartening economic data, new concerns about GM, and relentless uncertainty about the financial system. Short selling ahead of the government's employment report today exacerbated the losses, slashing 281 points from the Dow Jones industrials and sending all the major indexes down more than 4 percent.

Stocks fell in every industry, with beleaguered banks posting some of the steepest drops. Citigroup Inc., still shaky despite receiving billions in government aid, at times sank below $1 and finished down 9.73 percent at $1.02. General Motors, meanwhile, ended with a loss of 15.45 percent at $1.86 as it warned of possible bankruptcy.

"Citigroup going below a buck today was a little scary," said Mark LeStrange, director of sales at Source Trading.

"To say that we're cheap here and it's a good value, it sounds right, but in all reality we could go 50 percent lower," he said. "Nobody has any idea how low we can go."

The Standard & Poor's 500 index is now down 56.4 percent from its peak in October 2007, making it the second worst slide for the index since its fall of 86.2 percent from 1929 to 1932.

The latest torrent of selling came ahead of the February Labor Department report, which is likely to show hundreds of thousands of jobs were lost. Even some positive news, including some better-than-expected retail sales and factory orders, was not enough to stoke investor confidence.

Short sellers also dragged on the market, analysts said. Short sellers place bets that a stock will fall, and rising short positions on a stock can intensify its decline.

The Dow fell 281.40, or 4.09 percent, to 6,594.44. The S&P 500 index dropped 30.32, or 4.25 percent, to 682.55. The Nasdaq composite index fell 54.15, or 4.00 percent, to 1,299.59.

The Russell 2000 index of smaller companies fell 21.85, or 5.88 percent, to 349.45.

Stocks fell initially after China deflated investors' hope that it would take new steps to stimulate its economy, but the discouraging economic data sent stocks even lower. The hope that China would announce more government spending to help its economy was a major factor behind the market's bounce Wednesday, which sent the Dow Jones industrials up nearly 150 points after a five-day slide.

Among yesterday's gloomy reports, the Commerce Department said orders for manufactured goods fell 1.9 percent during the first month of the year. While this was better than the 3.5 percent drop economists had expected, it marked a record sixth straight month of declines.

Data showing that initial unemployment claims fell more than anticipated last week failed to buoy stocks.

Negative comments from Moody's Investors Service weighed on already depressed financial stocks. Concerns about capital levels led the ratings agency to downgrade the ratings of Bank of America Corp. and Wells Fargo & Co. Moody's also lowered the outlook on JPMorgan Chase & Co.'s ratings to negative. Bank of America shares dropped 42 cents, or 11.70 percent, to $3.17; Wells Fargo plunged $1.54, or 15.94 percent, to $8.12; JPMorgan tumbled $2.70, or 13.99 percent, to $16.60.

Light, sweet crude fell $1.77 to settle at $43.61 a barrel on the New York Mercantile Exchange.

Overseas, Britain's FTSE 100 fell 3.2 percent, Germany's DAX index dropped 5 percent, and France's CAC-40 fell 4 percent.