Wall Street suffered its worst day in six weeks on Wednesday as the Dow extended its losing streak to six after Citigroup lost nearly 25% of its market value and a new report showed retail sales plummeted by a record amount in December.

Today’s Markets

The Dow Jones Industrial Average lost 248.42 points, or 2.94%, to 8200.14, the S&P 500 fell 29.17 points, or 3.35%, to 842.62 and the Nasdaq Composite sank 56.82 points, or 3.67%, to 1489.64. The consumer-friendly FOX 50 dropped 22.38 points, or 3.39%, to 638.00.

Wednesday’s selloff marks a continuation of a recent market tailspin that has seen the Dow lose 800 points as the optimism that accompanied New Year's has disappeared amid a dark cloud of gloomy economic and corporate headlines.

“Yes, a lot of this bad news is baked in but when we continue to get nothing but bad news, the market is finally going to break,” said Ryan Detrick, equities analyst at Schaeffer’s Investment Research.

All 30 components of the Dow fell at least 1%, led by Citigroup (C) and steep declines for Alcoa (AA), General Electric (GE) and American Express (AXP). On the other hand, defensive stocks like Wal-Mart (WMT) and Johnson & Johnson (JNJ) saw more modest selling, but still closed in the red.

The Dow has ended down in seven of 2009's nine trading days and is now just 700 points away from its 5 1/2-year low of 7552 that was set on November 20.

While the S&P 500 and Nasdaq Composite managed minor gains a day ago, the Dow has closed in the red for the past six sessions, highlighted by Wednesday’s plunge, the worst one-day decline since the index lost 680 points on December 1.

The markets were also spooked by the Federal Reserve’s Beige Book, which as expected detailed the nation’s economic weakness at the end of 2008.

“Much of this plays into what we already knew: that the fourth quarter was an absolute disaster.  But what is becoming more and more accepted is the probability that the depth of the economic decline is so deep and so severe that it is not likely to be meaningfully reversed in the immediate future,” Dan Greenhaus, equity analyst at Miller Tabak, wrote in a research note.

Retail Sales Spark Selloff

Fears about the economy were reinforced Wednesday as the government said retail sales plunged nearly twice as much as expected in December. In the record sixth straight month of declines, retail sales slid by 2.7% from November and 9.8% from a year ago, breaking last month’s all-time record decline.

In a reflection of those retail woes, Tiffany (TIF) reported a 21% plunge in holiday sales, forcing the luxury jeweler to slash its fiscal-year outlook below analyst estimates.

The news wasn’t received well by the beaten-down retail sector as shares of companies like Amazon.com (AMZN), Best Buy (BBY) and Macy’s (M) plunged even further.

Citi Leads the Way Down

Financial jitters continue to swirl on Wall Street as Citigroup is said to be poised to break itself up after suffering the worst six quarterly performance in its history. Shares of Citi lost almost one-fourth on Wednesday, leading a sector plunge of nearly 6%.

Citi, which is spinning off prized brokerage Smith Barney in a joint venture with Morgan Stanley (MS) in an effort to raise cash, plans to shrink its balance sheet by a third, The Wall Street Journal reported. FOX Business has been reporting for several months that Citi was going to break itself up.

In moves that will likely bring a painful end to the "financial supermarket" created by Sandy Weill, Citi will reportedly attempt to shed its private-label credit card business, consumer finance division and other units. Citi could detail the restructuring plans when it releases its quarterly report, which is now slated for Friday morning.

Financial fears were also bolstered by Deutsche Bank (DB) as Germany’s largest bank warned it will post a loss of $6.4 billion for the fourth quarter.

At the same time, analysts issued a series of bearish notes: Morgan Stanley predicted U.K. banking giant HSBC (HBC) may need to raise an additional $30 billion of capital, analyst Dick Bove slashed his profit estimates for Bank of America (BAC) and Atlantic Equities downgraded Wells Fargo (WFC) and said the bank’s dividend is at risk.

Crude Returns to Red

On the energy front, crude oil futures withstood a bearish production report but still ended in the red for the sixth day of the past seven. The price of a barrel of crude settled at $37.28, down 50 cents, or 1.32%, on the day.

The commodity came under heavy pressure after the government said oil stockpiles jumped by 1.1 million barrels last week and distillate inventories surged by 6.3 million barrels, underscoring the deteriorating demand for energy.

Corporate Movers

Apple (AAPL) CEO Steve Jobs announced plans to take leave of absence until end of June, citing “more complex” health-related issues than he originally thought. Tim Cook, Apple’s chief operating officer, will take responsibility for Apple’s day-to-day operations.

Nortel (NT) filed for Chapter 11 bankruptcy protection Wednesday. The Canadian-based telecom, which had been due to make $107 million in interest payments, said its day-to-day operations are expected to continue as it restructures.

Bunge (BG), the No. 1 global oil seed processor, closed sharply lower after warning of a worse-than-expected 2008 profit due to soft demand.

Chrysler LLC denied reports the auto maker has had discussions to tell assets to Renault-Nissan or factories to Canadian parts supplier Magna International. Also, Chrysler said it is on track to re-open the plants by early February as originally planned.

Walgreen (WAG) announced plans to slash capital spending by $1 billion over the next three years by moving field management and cutting 1,000 positions in 2009.

Oracle (ORCL) laid off 500 employees in North America on Friday amid rumors of job cuts that would affect thousands of people, the Journal reported.

Honda (HMC) and Hyundai had their credit ratings slashed by Fitch on concerns about deteriorating global auto sales.

Data Dump

The Commerce Department said business inventories declined by 0.7% in November as companies braced for the economy to sap demand for goods. The pullback in inventories was greater than the 0.4% decline economists had forecasted.

Foreign Markets

Deutsche Bank's loss warnings sent European markets to their sixth straight plunge as the Dow Jones Euro Stoxx 50 Index, which tracks the 50 largest companies in Europe, fell by 4.68% to 2298.46.

London's FTSE 100 plunged 4.97% to 4180.64 while Germany's DAX sank by 4.63% to 4422.35 and Paris's CAC 40 fell 4.56% to 3052.00

In Asia, Japan's Nikkei rose 0.3% to 8438.45 and Hong Kong's Hang Seng gained 0.27% to 13704.61. Australia's ASX 200 rose 0.9%.