DETROIT — Auditors for General Motors, in one of the bleakest assessments yet of the automaker's prospects, said Thursday that GM's survival was in "substantial doubt" even if it received all $30 billion it hoped to borrow from the federal government.
The report by the auditing firm Deloitte & Touche also raised the possibility that GM could have to liquidate its operations if its loan request is denied.
GM's acknowledgment that it is perilously close to bankruptcy stirred new fears among investors, who drove down GM's shares by 15 percent, to $1.86.
The announcement does not mean bankruptcy is imminent. But it underscores how difficult it will be for GM to successfully complete the restructuring plan that it filed with the Treasury Department last month.
The news fed a cascade of stock prices to their lowest levels in more than 12 years.
Investors wrestled with relentless uncertainty about the financial system. Short selling — bets that stocks will fall — ahead of today's employment report worsened 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 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 9.7 percent at $1.02.
"Citigroup going below a buck today was a little scary," said Mark LeStrange, director of sales at Source Trading.
GM, meanwhile, ended with a loss of 15 percent at $1.86.
Deloitte & Touche laid out numerous chains of events that could trigger a bankruptcy filing by GM. The company, which lost $30.9 billion last year and has received $13.4 billion in government loans since December, made the disclosure in its annual report filed with the Securities and Exchange Commission.
GM, which is seeking additional billions in federal loans, must prove its viability to President Obama's auto task force by a March 31 deadline.
Robert Gibbs, the White House press secretary, said the task force was well aware of GM's precarious state before the auditors' report was released.
"Obviously, I don't think it comes as a big surprise to many that the auto industry is in crisis," Gibbs said Thursday.
The auditors' warning, known as a "going concern" notice, put GM in violation of several loan covenants, but the company said it was able to obtain waivers from its creditors. The loans could be recalled, though, if the Treasury Department does not approve GM's restructuring plan.
In that case the government also could demand immediate repayment of the money it has already lent to GM, which GM said in the filing it would be unable to do.
The GM news just made a bad day worse on Wall Street.
Fears about the depth and breadth of the recession drove the Dow Jones' losses since January to 25 percent — just shy of the 33 percent decline recorded for all of 2008.
"It borders on unbelievable," said Glenn W. Tyranski, senior vice president of financial compliance at NYSE Regulation.
Among Thursday's gloomy reports, the Commerce Department said orders for manufactured goods fell by 1.9 percent during January. While this was better than the 3.5 percent drop economists expected, it marked a record sixth month of declines.
The number of companies trading at $10 or less on the Standard & Poor's 500-stock index has increased tenfold since the market peaked in October 2007. And with no end in sight to the downward spiral, the New York Stock Exchange has temporarily suspended its $1 minimum share-price requirements to prevent a wave of delistings.
The Dow Jones industrial average closed at 6,594.44, down 281.40 points — its lowest close since April 15, 1997. The broader S&P 500 fell 30.32 points, or 4.25 percent, to 682.55, its lowest close since September 1996. The Nasdaq composite index fell 4 percent, or 54.15 points, to 1,299.59.
The rout highlighted the apathy and pessimism that has seeped into all corners of the market.
Financial stocks continue to be among the worst hit, despite the trillions that governments around the world are spending to restore the system. Citigroup, which is fending off fears of outright nationalization, was joined in the free-fall column Thursday by Bank of America.
BOA, also the recipient of two government lifelines, saw its stock slip to $3.17.
Investors have been wondering how much more the market can fall. At the same time, there is a contingent of investors with a "why sell now" mentality who are fearful of missing the next rally, said Todd Salamone, senior vice president of research, Schaeffer's Investment Research.
"A lot of people are banking we can't go much further, but if you look to the '30s, we could indeed go a lot lower," he said.
Information from the New York Times and Associated Press was used in this report.