By Nick Godt & Kate Gibson, MarketWatch NEW YORK (MarketWatch) -- U.S. stocks on Thursday fell for a second straight day, paced by slumping energy-related shares, after the price of crude fell to four-year lows and two of the nation's Big Three automakers said they would halt production. Volatility in the market also went into overdrive ahead of the expiration of options and futures contracts Friday. "As that year-end selling pressure subsides, we should see the markets stabilize and consolidate," said Marc Pado, market strategist at Cantor Fitzgerald. "We have quadruple-witching [expirations] tomorrow. Hopefully this will flush out the last of the willing sellers and Santa can sneak in through the back door." After falling almost 300 points during the session, the Dow Jones Industrial Average ended at 8,604.99, off 219.35 points, or 2.5%. Shares of Dow component General Electric Co. fell 8.2% after Standard & Poor's lowered the rating outlook on the company's financial-services arm to negative from stable, citing its reliance on confidence-sensitive wholesale funding. S&P affirmed its AAA-long-term and A-1+ short-term counterparty credit ratings on GE. The S&P 500 Index fell 19.08 points, or 2.1%, to 885.34, with the Nasdaq Composite Index ) finishing 26.94 points down at 1,552.37. Among blue-chip issues, General Motors Corp. was the biggest loser, off 16% after The Wall Street Journal reported GM and Chrysler have reopened merger talks. Late Wednesday, privately held Chrysler said it would idle all 30 of its plants for at least a month, in an effort to bring output closer in line with plunging demand for new cars and trucks. Separately, shares of Ford Motor Co. fell 9.6%. Reports said the automaker would shut down most of its North American assembly plants for an extra week in January. See story on U.S. automakers. Crude futures tumbled 10% to close below $37 a barrel, underscoring relentless signs of a sharp slowdown in oil demand. The price of oil has dropped almost 60% this year. See Futures Movers. That downdraft helped push energy-sector shares down 7.5%, with the materials sector off almost 5% as gold and other commodities suffered. Shares of chemicals producer Rohm & Haas Co. fell 2.5% and miner Newmont Mining Corp. declined 5%. See Metals Stocks. Volume on the New York Stock Exchange neared 1.4 billion, and decliners outran advancers more than 3 to 2. On the Nasdaq, 854 million shares were exchanged, and decliners beat advancers almost 9 to 5. Forecasts cut FedEx Corp. shares fell 2.1% after it said it would freeze hiring and cut salaries to reduce costs. The Memphis, Tenn.-based shipper, a barometer for broadbased spending, said second-quarter earnings rose to $493 million, or $1.58 a share, from $479 million or $1.54 a share in the same period a year ago, but it warned of "very difficult" economic conditions through calendar-year 2009. Also showing the effects of the slowing economy, Ingersoll-Rand Co. said it was cutting its fourth-quarter estimate for adjusted earnings to a range of 20 cents to 30 cents a share from an earlier view of 55 cents to 75 cents a share. Full-year adjusted earnings per share from continued operations are now expected to be in the range of $3 to $3.55, down from a previous $3.35 to $3.55. See full story. Ingersoll-Rand's shares sank 4.7%. Better-than-expected data still painted a bleak picture of the U.S. economy. Earlier, the Labor Department said first-time claims for state unemployment benefits dropped to 554,000, down 21,000, in the week ended Dec. 13 after having surged to a 26-year high in the previous week. Still, the four-week average of those claims rose 2,750 to 543,750 -- the highest level since December 1982 -- and initial claims are not expected to drop again until mid-January, the Labor Department reported. Read Economic Report. The dollar was up against most major counterparts, jumping against the euro after the European Central Bank cut its deposit rate and lifting its lending rates. See Currencies. In international equities markets, Japan's Nikkei 225 rose 0.6% overnight, while the U.K.'s FTSE 100 index was up 0.1%. The Dow Jones Industrial Average lost 99.8 points on Wednesday to close at 8,824.34. The S&P 500 fell 8.76 points and the Nasdaq lost 10.58 points.

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