U.S. stocks fell the most in five weeks after Citigroup Inc. said defaults will plague the financial industry for the rest of the year.

Citigroup, the largest U.S. bank, posted its steepest loss since Aug. 28 after Chief Financial Officer Gary Crittenden said late payments on home loans may worsen in the fourth quarter. Bank of America Corp. and JPMorgan Chase & Co. also retreated. Eaton Corp., the world’s second-biggest maker of hydraulic equipment, led industrial shares to their lowest since Sept. 26 after reducing its 2007 profit forecast because of the weak U.S. housing market.

The Standard & Poor’s 500 Index lost 13.09, or 0.8 percent, to 1,548.71; energy companies posted the only advance among 10 industry groups in the index after the price of oil climbed to a record. The Dow Jones Industrial Average tumbled 108.28, or 0.8 percent, to 13,984.8. The Nasdaq Composite Index fell 25.63, or 0.9 percent, to 2,780.05. [MORE]