US stocks' early rally followed advance in Asia and Europe after China announced plans to boost its economy through a mix of spending, subsidies, looser credit policies and tax cuts. Commodity and energy stocks led the big board higher.

However, investors' concern was refreshed as the US government yesterday provided another US$40 billion financial assistance to the insurance giant American International Group, which sent the bailout up to around US$150 billion, after the company reported a loss of US$24.47 billion for the third quarter.

General Motors Corp., the US largest automaker, was downgraded to "sell" at Deutsche Bank AG. Deutsche Bank also cut its target price to zero. Shares of GM tumbled 30 percent.

Circuit City Stores Inc., the second-biggest US electronics retailer, filed under Chapter 11 of the bankruptcy code.

The Dow Jones industrial average fell 73.27 points, or 0.82 percent, to 8,870.54. The Standard & Poor's 500 Index lost 11.78 points, or 1.26 percent, to 919.21. The Nasdaq Composite Index was off 30.66 points, or 1.86 percent, to 1,616.74.