GM leads Dow's fall to lowest close in 5 years

NEW YORK Stocks plunged in the final hour of trading yesterday, sending the Dow Jones industrial average down 679 points -- more than 7 percent -- to its lowest level in five years.

The decline came after a credit ratings agency said it might cut its rating on General Motors Corp. and affiliate GMAC LLC.

Based on preliminary figures, U.S. stock market paper losses totaled $872 billion yesterday, and the value of shares overall has tumbled $8.33 trillion since last year's high in October.

The same credit agency that put GM on its watch list also put Ford Motor Co. on credit watch negative. The ratings agency said GM and Ford have adequate liquidity now, but that could change in 2009. GM led the Dow lower, falling $2.15, or 31 percent, to $4.76, while Ford fell 58 cents, or 22 percent, to $2.08.

Arthur Hogan of Jefferies & Co. pointed to the still-frozen credit markets and to LIBOR, the bank-to-bank lending rate that remains stubbornly high despite interest rate cuts this week by central banks. "Until that starts coming down, you'll be hard-pressed to find anyone getting excited about stocks," he said.

The tech sector saw less selling than other parts of the market after IBM affirmed its forecast. IBM fell $1.55, or 1.7 percent, to $89. Meanwhile, Intel fell 65 cents, or 4 percent, to $15.60. Microsoft fell 71 cents, or 3.1 percent, to $22.30.

Energy names were among the biggest decliners as the price of oil fell. Exxon Mobil Corp. fell $9, or 12 percent, to $68, while Chevron Corp. fell $9.10, or 12 percent, to $64.