NEW YORK » Wall Street extended its losses yesterday, as a negative ratings outlook on financial and industrial powerhouse General Electric Co. shook an already fragile investor psyche and sent stocks tumbling.

After moving within a narrow trading range for much of the session, the Dow Jones industrial average dropped about 220 points. The broader Standard & Poor's 500 index lost more than 2 percent.

Stocks struggled to find a direction in the early going yesterday as investors sifted through a number of economic indicators, including more layoffs and dismal earnings forecasts.

Standard & Poor's lowered its outlook on GE and its GE Capital finance arm to negative from stable. S&P affirmed their Triple-A ratings, but said there is a one-in-three chance they could lose them because of the ongoing financial struggles at GE Capital.

GE shares fell $1.43, or 8.2 percent, to close at $15.96.

At the same time, energy stocks tumbled as oil prices plunged. Crude briefly dropped below $36 a barrel yesterday on worries of a drastic pullback in energy spending, even after a record production cut from OPEC earlier this week. The price settled at $36.22 a barrel in trading on the New York Mercantile Exchange.

Oil prices have been on a downward march since reaching a high of near $150 a barrel in July.

Chevron Corp. fell $3.79, or 4.9 percent, to $73.03, while Exxon Mobil Corp. dropped $4.06, or 5 percent, to $77.

The Dow fell 219.35, or 2.49 percent, to 8,604.99. The Standard & Poor's 500 index fell 19.14, or 2.12 percent, to 885.28, while the Nasdaq composite index fell 26.94, or 1.71, to 1,552.37.

The Russell 2000 index of smaller companies fell 7.42, or 1.52 percent, to 479.17.

Declining issues outnumbered advancers by about 3 to 2 on the New York Stock Exchange, where consolidated volume came to 5.46 billion shares, up from 5.18 billion shares on Wednesday.

The U.S. Labor Department reported that initial jobless claims fell by more than economists anticipated to 554,000 last week. The claims remain near last week's 26-year high, and the four-week moving average for claims is up, but investors had been bracing for a gloomier reading.

Meanwhile, a private research group's measure of the economy's health fell again in November and its six-month rate of decline hit the worst level since 1991.

The yield on the benchmark 10-year Treasury note fell to 2.07 percent late yesterday from 2.19 percent late Wednesday. The yield on the popular three-month T-bill — whose yield has at times gone negative due to frenzied buying — remained flat at zero.

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