Wall Street suffered its third consecutive triple-digit selloff as the markets were slammed on Monday by earnings jitters, plunging energy stocks and new Citigroup fears.

Today’s Markets

The Dow Jones Industrial Average lost 125.13 points, or 1.46%, to 8474.05, the S&P 500 fell 20.09 points, or 2.26%, to 870.26 and the Nasdaq Composite dropped 32.80 points, or 2.09%, to 1538.79. The consumer-friendly FOX 50 sank 13.36 points, or 1.98%, to 661.66.

The optimism on Wall Street at the beginning of 2009 has quickly vanished as the Dow has lost nearly 550 points during the current four-day losing streak. While the markets are still well above their recent lows, the gap is quickly narrowing.

“I would hope that most people are looking at the earnings numbers as being pretty crappy, to use a technical term," said Paul Nolte, director of investments at Hinsdale Associates.The current quarter and the fourth quarter of 2008 are “probably going to be the worst earnings reports we are going to see in this cycle because we have come to a screeching halt." 

Apprehension on Wall Street was evident as Citigroup (C) lost nearly one-fifth of its already depressed market value, energy names slumped 4% on the fifth straight losing session for oil and the markets shrugged off a $1.4 billion takeover by Abbott Labs (ABT) of Advanced Medical Optics (EYE).

“I think everybody is finally coming out of the ether from the holidays and realizing there is still a lot of uncertainty. Citi would be a great indicator of that,” said Frank Davis, director of sales and trading at LEK Securities. “You really need the financial sector to be healthy…Forget healthy, just stable for the rest of the market to go higher.”

Still, Davis noted that Monday's equities selloff lacked the heavy volume that would indicate conviction and was orderly, unlike the "insane volatility" that became the norm in October and November. 

Citigroup and Alcoa (AA) helped lead the way down on the Dow on Monday. Bank of America (BAC) and Caterpillar (CAT) also saw heavy selling. On the other hand, defensive names like McDonald's (MCD) and Kraft (KFT) closed slightly higher. 

Earnings jitters were apparent as Wall Street awaits an expected fourth-quarter loss from aluminum giant Alcoa (AA), which is kicking off earnings season after the closing bell. Alcoa's shares were also hurt by a downgrade from Deutsche Bank, which cut its rating to "sell" from hold." 

Alcoa likely won't be alone in reporting ugly earnings as Thomson Reuters estimates profits from S&P 500 companies will decline by 15% on average from a year ago. Other major companies such as Intel (INTC), Genentech (DNA) and Charles Schwab (SCHW) are also slated to unveil quarterly results this week. 

Citi's Looming 4Q Loss, TARP in Focus

The markets were clearly spooked by Citigroup, which on Friday announced the resignation of Robert Rubin, the special adviser and former Treasury secretary, and is said to be considering spinning off prized brokerage unit Smith Barney in a joint venture with Morgan Stanley (MS). Shares of Citi and other financial names like Goldman Sachs (GS) and KeyCorp (KEY) fell sharply on the renewed financial jitters. 

Citigroup, which needed massive government assistance to survie, could receive $10 billion by selling control of Smith Barney in a move that would create the world's largest brokerage house. The sale of Smith Barney would likely be done in advance of a looming fourth-quarter loss, which could total $10 billion and be the "worst earnings report in the history of the company," sources tell FOX Business's Elizabeth MacDonald. 

“We are going to see continued consolidation in that sector. That’s going to have to be the M.O. at this point. We are going to see who the ones [left] standing are," said Nolte. “I don’t think you are going to see anyone [else] go bankrupt because the government screwed it up last time with Lehman Brothers.”

(Click here to read EMac's blog: "Citi Still Needs More Capital")

Meanwhile, President-elect Barack Obama asked the White House on Monday to notify Congress, on his behalf, of his intent to use the remaining $350 billion of the controversial Troubled Asset Relief Program. President George W. Bush agreed to Obama's request for the financial rescue funds.

Obama economic aide Larry Summers sent a letter to lawmakers on Monday outlining a series of proposed changes to TARP, including greater oversight and disclosure as well as limits on executive compensation, dividends and stock buybacks.

Crude in Free Fall

On the energy front, crude oil futures plummeted below the $40-a-barrel threshold, building on last week's 12% plunge. The price of a barrel of crude ended down $3.24, or 7.94%, to $37.65, its lowest level since Christmas Eve. The commodity has lost 23% of its value as supply continues to outstrip demand despite OPEC's unprecedented production cuts. 

The slumping energy prices come as Goldman Sachs predicted in a note on Friday that higher inventories would send crude oil down to $30 for the first quarter of 2009. Such a result would be welcomed by consumers as a new national survey showed gasoline prices rose 11.71 cents last week, the first weekly increase since early July. 

Corporate Movers

General Motors (GM) CEO Rick Wagoner told The Wall Street Journal the auto maker's ability to survive is not 100% certain. GM is considering all options and has sufficient liquidity through March 31, the newspaper reported. Also, GM picked South Korea’s LG Chem to supply lithium batteries for the auto maker’s highly anticipated Chevrolet Volt.

Abbott Laboratories (ABT) unveiled a $1.4 billion deal for Advanced Medical Optics (EYE) in a transaction that amounts to a 150% premium on the eye care company.

Hartford Financial (HIG) lost nearly one-fifth of its market cap as life insurers plunged on a Goldman Sachs report that called a recent sector rally “unwarranted.” Goldman sees Principal Financial Group (PFG), Prudential (PRU), Lincoln National (LNC) and Hartford as most at risk.

Textron’s (TXT) Cessna Aircraft unveiled plans to lay off 2,000 of its 12,000 employees. The plane manufacturer is the biggest employer in Wichita, Kan.

ExxonMobil (XOM) could be on the hunt to acquire a rival energy company like Royal Dutch Shell (RDS) or BG Group PLC or enter into a partnership with an oil-rich nation like Brazil, the Journal reported.

Foreign Markets

European markets lost ground for the fourth consecutive session as the Dow Jones Euro Stoxx 50 Index fell 1.38% to 2129.18 and London's FTSE 100 sank 0.50% to 4426.19.

In Asia, Hong Kong's Hang Seng sank 2.83% to 13971 for its fifth consecutive losing day while Tokyo's Nikkei was closed for a holiday. Australia's ASX 200 fell 1.4% to 3683.30, a fresh 2009 low.