Stocks Slump as Banks, GM Sell Off

Updated from 2:47 p.m. EST

Stocks in New York started the holiday-shortened week on a down note with steep losses amid more dour economic data and corporate news.

The Dow Jones Industrial Average fell 297.81 points, or 3.8%, to 7552.60, and the S&P 500 gave up 37.67 points, or 4.6%, to 789.17. The Nasdaq was lessened by 63.70 points, or 4.2%, ending at 1470.66.

"Right now everybody is going to watch and see if the November lows are going to hold," says Jeffrey Saut, chief investment strategist at Raymond James, earlier in the day. The Dow was a fraction of a point off its Nov. 20 close, 7552.29, by the session's end, while the Nasdaq and S&P had a bit more of a buffer.

Next to General Motors(GM Quote), banks were the poorest performers on the Dow, with Bank of America (BAC Quote) losing 12% to $4.90, Citigroup (C Quote) down 12.3% to $3.06, and JP Morgan Chase(JPM Quote) off by 12.3% at $21.65. GM dropped 12.8%.

Meanwhile, President Barack Obama signed the $787 billion stimulus package into law, but that did nothing to inspire buying among traders.

"This is the beginning of the end," said the president, calling the package "a balanced plan with a mix of tax cuts and investments." The plan is "bold and balanced" and "will meet the demands of this moment," he added. "We're putting Americans to work, doing the work that America needs done."

President Obama is expected to flesh out a plan to help distressed homeowners avoid foreclosures on Wednesday. Thus far though, the government programs of 2009 haven't produced confidence on Wall Street.