5:00PM EST: U.S. stocks slid, sending the Standard & Poor’s 500 Index to a 12-year low, as the government cut shareholders’ stake in Citigroup Inc. by 74 percent and the economy shrank at a faster pace than previously estimated.

Citigroup plunged 39 percent after the Treasury agreed to convert as much as $25 billion of preferred shares into common stock in a third rescue attempt. Bank of America Corp. tumbled 26 percent, snapping a four-day rally in an S&P 500 group of banks.

The S&P 500 lost 2.4 percent to 735.09, its lowest close since December 1996. The Dow Jones Industrial Average fell 119.15 points, or 1.7 percent, to 7,062.93, leaving it 50 percent below its 2007 record and at its lowest level since May 1997. The Russell 2000 Index slipped 1 percent.

The S&P 500 slid 4.5 percent over the past five days, its third straight weekly decline, as companies from JPMorgan Chase & Co. to Textron Inc. cut dividends to shore up capital and President Barack Obama proposed reducing payments to health-care companies. The index fell 11 percent in February amid concern Obama’s stimulus package won’t stem the deepening recession.

(Bloomberg.com)