Dow Sinks to Lowest Level in 5 Years On Anniversary of Its All-Time High

NEW YORK, Oct. 9 -- Stocks plunged in the final hour of trading Thursday, sending the Dow Jones industrial average down more than 675 points, or more than 7 percent, to its lowest level in five years after a major credit-rating company said it was considering cutting its rating on General Motors. The Standard & Poor's 500-stock index also fell more than 7 percent. The declines came on the anniversary of the closing highs of the Dow and the S&P.

The Dow fell 678.91, or 7.3 percent, to 8579.19. The average hadn't closed below 9000 since June 30, 2003. The S&P 500 fell 75.02, or 7.6 percent, to 909.92, and the Nasdaq composite index fell 95.21, or 5.47 percent, to 1645.12.

The Dow has lost 5585 points, or 39 percent, since closing at 14,198 a year ago. The S&P 500, meanwhile, is off 655 points, or 42 percent, since recording its high of 1565.15.

Thursday's sell-off came as Standard & Poor's Ratings Services put GM and its finance affiliate GMAC under review to see whether its rating should be cut. The action means there is a 50 percent chance that S&P will lower GM's and GMAC's ratings in the next three months. GM has been struggling with weak car sales in North America.

S&P also put Ford on credit watch negative. The ratings company said that GM and Ford have adequate liquidity now but that could change in 2009.

Fear about the economy sent stocks lower in the final two hours of trading after a volatile start to a day for the Dow and S&P 500. The Nasdaq spent much of the session higher but eventually dropped as the sell-off intensified. Its losses were less severe because of the relatively modest stock drops in firms such as Intel and Microsoft.

Demand remained high for short-term Treasurys, a refuge for investors willing to trade modest returns to protect their money. The yield on the three-month Treasury bill, which moves opposite its price, fell to 0.51 percent from 0.63 percent late Wednesday. Longer-term debt prices fell, with the yield on the 10-year note rising to 3.77 percent from 3.65 percent.

Movers

GM led the Dow lower, falling $2.15, to $4.76.

Ford gave up 58 cents, to $2.08.