YAHOO [BRIEFING.COM] : Wednesday marked an ugly session on Wall Street, with the S&P 500 and Nasdaq tumbling to their lowest levels in five years and the Dow dropping to a five-year closing low. Concerns over the fate of U.S. automakers, disappointing economic data, a dour outlook from the Fed and the market's inability to hold its lows fueled the selling interest.

The major indices ended the session at their worst levels, in above average volume.  The Dow, Nasdaq and S&P 500 fell 5.1%, 6.5% and 6.1%, respectively.

October CPI fell by the largest amount on record, which is good news in terms of the inflation outlook, but also represents the weakness of the economy. Specifically, CPI fell 1.0% month-over-month as energy prices plummeted 8.6%. Prices also declined outside of energy, indicating weak demand -- core CPI fell 0.1% as used car prices dropped 2.4% and apparel prices fell 1.0%.

The latest new residential construction data fell to the lowest levels on record, and provide another weak point for fourth quarter GDP calculations. October housing starts declined 4.5% month-over-month to a seasonally adjusted annual rate of 791,000, which was slightly higher than the consensus estimate of 780,000. Building permits dropped 12% to a seasonally adjusted annual rate of 708,000, which was worse than the consensus estimate of 774,000.

The Federal Reserve's 2008 and 2009 projections, released today in the FOMC Oct. 29 meeting minutes, mirrored the latest economic data, with the Fed reducing forecasts for GDP growth and inflation. For 2008, the Fed expects the economy will grow between 0.0% and 0.3%, down sharply from its previous forecast of 1.0% to 1.6%. The 2009 forecast now calls for growth between -0.2% and 1.1%, down from the previous forecast of 2.0% to 2.8%. The Fed also raised its unemployment forecast.

The minutes hinted at the likelihood of further monetary easing, as some FOMC members saw potential for further rate cuts.

Although weakness was broad-based with losses posted by all ten sectors and 492 of the 500 components within the S&P 500, the financial sector got hit the hardest with a decline of 11.5%.

Citigroup (C 6.45, -1.91) tumbled 23% to its lowest level since 1995. Citi said it will buy the remaining $17.4 billion in structure investment vehicles it advised.

Automakers (-21.2%) got clipped as executives from General Motors (GM 2.77, -0.32), Ford (F 1.27, -0.41) and Chrysler, and the head of the UAW testified before the House Financial Services Committee in an attempt to secure a government loan. There were plenty of opponents in the House, which was similar to views that were expressed by Senate Banking Committee members yesterday. GM's CEO said on CNBC that the company is doing everything it can to avoid bankruptcy, as he sees a high risk that a Chapter 11 filing (restructuring) could turn into a Chapter 7 (liquidation). Reports that Toyota Motor (TM 59.64, -3.61) is going to cut North America production also weighed on automakers.

A risk aversion trade lifted Treasuries, with the 30-year bound rallying 3 points to yield 3.94% -- marking the lowest yield since the 30-year bond was introduced in 1977. The 10-year note rose 44 ticks to send its yield down to 3.36%.

In commodity trading, crude prices fell 2.4% to $53.10 per barrel. The government's weekly energy inventory showed a larger-than-expected build in crude and gasoline stockpiles, indicating decreased demand.DJ30 -427.47 NASDAQ -96.85 NQ100 -5.9% R2K -7.9% SP400 -7.4% SP500 -52.54 NASDAQ Adv/Vol/Dec 2519/2.36 bln/298 NYSE Adv/Vol/Dec 187/1.63 bln/2998