Stocks Nosedive Into the Close, Sink More Than 2.5%

Updated from 2:59 p.m. EST

After fluctuating throughout much of Thursday's session, stocks on Wall Street sold off into the close as the fate of the troubled U.S. automakers hung in the balance and traders shied away from buying stocks in advance of Friday's November jobs report.

The Dow Jones Industrial Average sank 215.45 points, or 2.5%, to 8376.24, and the S&P 500 lost 25.52 points, or 2.9%, to 845.22. The Nasdaq fell 46.82 points, or 3.1%, to 1445.56.

Scrambling to stay afloat, the automakers were again in focus on Thursday. Earlier in the week, General Motors (GM Quote), Ford (F Quote) and Chrysler headed to Capitol Hill to seek government help as they navigate a precarious market climate. On Thursday, the CEOs of the Big Three returned to D.C. to testify before Congress about potential bailout legislation.

They told lawmakers that they would accept government oversight, even a Chrysler-GM merger, in exchange for funding, but that they insisted they needed immediate aid.

As the session closed, it remained unclear whether funding would come from the government's $700 billion Troubled Asset Relief Program, new legislation, or elsewhere. The Wall Street Journal reported that the Federal Reserve may refuse to lend directly to the automakers, a decision that would hand the companies' futures over to Congress and the Bush administration. Bloomberg reported that management at GM and Chrysler were contemplating a prearranged bankruptcy as a means to get government funds.

GM shares tanked 16% to $4.11, and Ford plummeted 6.7% to $2.66.

"There's a lot of question marks starting to be raised about whether this GM bailout is going to come through," said Paul Mendelsohn, chief investment strategist at Windham Financial. Mendelsohn said that wrangling among government agencies and Congress was adding to the uncertainty