US stocks tumbled Monday amid concerns over the fate of the struggling car industry, which will be given a last chance to restructure operations or lose government support.
President Barack Obama said that General Motors Corp and Chrysler LLC had so far failed to prove that they can survive. He called for a series of changes in the two companies' outdated business models and forced out long-time GM chief executive Rick Wagoner.
GM, the largest US carmaker, will be given 60 days to complete deals with labour unions, creditors and others to cut costs and return to profitability. Chrysler, the third-largest US carmaker, was given 30 days to reach an agreement to partner with Italian firm Fiat Motors SA - the two firms announced a deal within 90 minutes of the president's speech.
GM shares plunged 25 per cent, while Ford Motor lost 2.8 per cent and Toyota shed 3 per cent.
"We cannot and must not, and we will not let our auto industry simply vanish," Obama said. "But we cannot continue to excuse poor decisions. We cannot make the survival of our auto industry dependent on an unending flow of taxpayer dollars."
The blue-chip Dow Jones Industrial Average shed 254.16 points, or 3.27 per cent, to 7,522.02. The broader Standard & Poor's 500 Index fell 28.41 points, or 3.48 per cent, to 787.53. The technology-heavy Nasdaq Composite Index slid 43.4 points, or 2.81 per cent, to 1,501.8.
The US currency climbed against the euro to 75.75 euro cents from 75.25 euro cents on Friday and fell to 97.45 Japanese yen from 97.86 yen, reported dpa