US stocks slumped on Thursday on renewed concerns over the fate of automakers. Shares retreated after GE’s debt rating was cut to negative by S&P. Investor’s sentiment was also dampened by a sharp retreat in crude oil prices.

The Dow Jones Industrial Average tumbled 219.35 points or 2.49% to finish at 8,604.99. The S&P 500 decreased 19.14 points or 2.12% to 885.28. The Nasdaq Composite shed 26.94 points or 1.71% to close at 1,552.37.

Shares of automakers were hammered. General Motors Corp. (NYSE: GM) skidded $1.10 or 16.25% to $3.66. Ford Motor Co. (NYSE: F) retreated 30 cents or 9.55% to $2.84.Wall Street Journal reported on Thursday that General Motors and Chrysler have restarted merger discussions. Ford Motor Co. (NYSE: F) announced that it will idle most of its North American assembly plants. Chrysler on Wednesday said it is halting all manufacturing operations at all 30 of its plants. On Thursday, President George W. Bush said "The autos obviously are very fragile. I am worried about a disorderly bankruptcy and what it would do to the psychology and the markets," he said. On auto bailout plan, Bush said “I haven’t made up my mind”."I'm also worried about putting good money after bad, and whether or not these autos will become viable in the future," he added.

General Electric Co. (NYSE: GE) fell $1.43 or 8.22% to $15.96 after S&P lowered its outlook for GE and GE capital's debt ratings from stable to negative. S&P said in a statement “earnings deterioration in 2009 and 2010 could be greater than we previously assumed. “The outlook revision reflects the continuing risks posed by GECC’s reliance on confidence-sensitive wholesale funding, despite the benefits of temporary U.S. government support programs and of management’s ongoing efforts,” the ratings agency added. S&P however, reaffirmed their AAA ratings.

Shares of raw material producers tumbled. Alcoa (NYSE: AA) lost 58 cents or 5.6% to close at $9.77. Exxon Mobil Corp. (NYSE: XOM) declined $4.06 or 5.01% to $77. Chevron Corp. (NYSE: CVX) slipped $3.79 or 4.93% to $73.03.Freeport-McMoRan Copper & Gold Inc. (NYSE: FCX) plummeted $2.69 or 10.34% to $23.32.

Equipment maker Caterpillar Inc. (NYSE: CAT) tumbled $2.49 or 5.58% to $42.16.

Ingersoll-Rand Company Limited (NYSE: IR) shed 76 cents or 4.65% to close at $15.59 after it cut its fourth-quarter outlook for adjusted earnings to a range of 20 cents to 30 cents a share from an earlier forecast of 55 cents to 75 cents.

Among financials, J.P Morgan (NYSE: JPM) dropped $1.65 or 5.18% to $30.21. Citigroup (NYSE: C) was down 40 cents or 5.11% at $7.43.Bank of America Corp. (NYSE: BAC) decreased 66 cents or 4.51% to $13.96.