NEW YORK » Investors sent stocks lower yesterday as anxiety over the growing list of firms affected by investment manager Bernard Madoff magnified Wall Street's concerns about the health of the financial sector.

Stocks had traded mixed early on as investors were relieved to hear that President Bush was working on providing short-term government help for the auto industry. The Senate's rejection of a $14 billion bailout for automakers last week had raised the possibility of a major bankruptcy, which some analysts say would result in as many as 3 million U.S. job losses next year.

But as that fear eased somewhat, it gave way to concerns about companies' exposure to Madoff's fund. Well respected in the investment community after serving as chairman of the Nasdaq Stock Market, Madoff was arrested Thursday for orchestrating what prosecutors say was a $50 billion Ponzi scheme to defraud investors.

Meanwhile, the Federal Reserve is expected to ratchet down today a key interest rate - perhaps to an all-time low- to prevent the sinking economy from falling deeper into the doldrums. Many economists predict the Fed will cut its rate in half - to just 0.50 percent when the two-day session wraps up.

The Dow Jones industrial average finished yesterday down 65.15, or 0.75 percent, to 8,564.53. The Standard & Poor's 500 index lost 11.16, or 1.27 percent, to 868.57, while the Nasdaq composite index fell 32.38, or 2.10 percent, to 1,508.34.

The Russell 2000 index of smaller companies fell 15.86, or 3.39 percent, to 452.57.

Decliners outnumbered advancers by about 3 to 1 on the New York Stock Exchange, where volume came to 4.37 billion shares, down from 5.12 billion on Friday.

In economic data, the Fed reported a decline in November industrial production, while the New York Fed reported a massive contraction in regional manufacturing activity.

Bond prices edged higher yesterday. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 2.51 percent late yesterday from 2.58 percent late Friday. The yield on the three-month T-bill - a safe short-term asset that's in very high demand - dipped to 0.02 percent late Monday from 0.04 percent late Friday.

The dollar fell against the euro and the British pound, but rose against the Japanese yen. Gold prices rose.

Light, sweet crude for January delivery fell $1.77 to $44.51 a barrel on the New York Mercantile Exchange.