With five year low Dow Jones plunged more than 400 points amid worries about auto industry and the economy.

The S&P 500 index closed more than 6 percent, while NASDAQ lost more than 6.5 percent.

Stocks finished at their lows as automakers pleaded for a relief which now stalls as Congress is not willing to co-operate with automakers. Congress wants auto makers to file for Chapter 11 and emerge just like airlines did; however; big three automakers claim that there might not be a second chance for them.

Shares of General Motors and Ford dropped more tan10 percent. In the past 12 months, GM share lost 90 percent of their value while Ford lost 80 percent.

Federal Reserve officials slashed forecast through 2009 and hinted that another rate cut might be needed. "Even after today's (half-point cut), the committee judged that downside risks to growth would remain," the Fed, the U.S. central bank, said in minutes released Wednesday.

The Fed Fund Rates, now at one percent, still proves not to be enough as economy is spiraling down even further. Fed now would have to start looking at other measures besides lowering interest rates to 50basis points or even zero to help economy.

Government bailouts may calm credit markets, but stock holders are holding their investments in short term. Investors still see huge risks with long-term credit market, corporate credit market, commercial mortgages, and high-yield bonds.

The Fed lowered its forecast for 2008 gross domestic product growth to between zero and 1.3 percent from its June projection of 1.0 to 1.6 percent. The economy could shrink by 0.2 percent in 2009, according to Fed.

Another grim economic outlook came for oil prices which fell nearly to 22-months low Wednesday. U.S. crude for December delivery fell 77 cents to $53.62 a barrel.

The government also reported that supplies of gasoline had risen by 500,000 barrels, and stockpiles of distillates, which are used to make diesel fuel and home heating oil, fell by 1.5 million barrels.

The decline has also slashed the price of unleaded gasoline in half since July to $2.047 a gallon, AAA reported Wednesday.

Big three automakers may pull some strength to get financing to survive, however; what are the chances that they will be back in 6 months to ask for more money? Many companies are in bankruptcy protection plans such as Linens 'n Things in bankruptcy since May, is liquidating now as creditors refused to extend more credit.

Mervyn's announced it would liquidate, as well as Circuit City, which filed for bankruptcy protection last week may liquidate as well.

However, companies such as General Motors may put a dent into U.S economy even further. With projected job loss of 3 million these jobs will vanish for good. Bankruptcy offers a path to reorganization and with GM, Ford that might not be the path.

GM and Ford needs to make payments to UAW, united auto works union, and with close to $70/hr assembly jobs, Ford and GM are unable to re-negotiate contracts in timely manner.

Bankruptcy protection gives companies a new start, while blocking all creditors. But this protection plan only protects while all managers and CEO's need to figure out how to return to profitability.