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Stocks plunged anew Friday, hurtling the Dow Jones industrial average down more than 280 points after comments from a major investment bank exacerbated the market's fears of a widening credit crunch.
The drop of more than 2 percent in major stock market indexes was a fitting end to two volatile weeks on Wall Street and followed back-to-back, late-day triple digit gains in the Dow. This time, the catalyst for a sharp skid was Bear Stearns Cos. CFO Sam Molinaro, who described turmoil in the credit market as the worst he'd seen in 22 years.
Stocks started the day with a decline after the government said jobs growth was not as strong as expected last month and a trade group reported that the nation's service sector grew at a slower pace than expected in July. Then, credit concerns, which have dogged investors for months and have roiled markets since last week, further weighed on investor sentiment; Standard & Poor's Ratings Services lowered its credit outlook on Bear Stearns to negative from stable because of the investment bank's exposure to the distressed mortgage and corporate buyout markets.
The Dow fell 281.18 to 13,182.15. As has been typical in recent selloffs, much of the decline came late in the session; the Dow lost more than 100 points in the final 15 minutes Friday. Despite the day's loss, the index was off only 0.63% for the week.
Broader stock indicators also fell sharply Friday. The Standard & Poor's 500 index dropped 39.14, or 2.66%, to 1,433.06, and the Nasdaq composite index fell 64.73, or 2.51%, to 2,511.25. For the week, the S&P fell 1.77%, while the Nasdaq fell 1.99%.
The concerns have pulled stocks from highs seen only weeks ago. The Dow, which on July 19 closed above 14,000 for the first time, now sits about 819 points below that level. That 5.9% decline puts the Dow more than halfway toward the technical threshold of a correction, which is 10%.
Bear Stearns fell $7.28, or 6.3%, to $108.35. Lehman Brothers Holdings Inc. fell $4.67, or 7.7%, to $55.78; the stock traded as low as $55.46, below its 52-week low of $58.85. Merrill Lynch & Co. fell $2.50, or 3.5%, to $70.05. The stock traded as low as $69.14, below its earlier 52-week low of $70.86.
In economic news, which didn't provide much reason for investors to look past the mortgage and credit concerns, the US Labor Department said nonfarm payrolls rose 92,000 last month, less than the 132,000 jobs created in June and below the average forecast of about 135,000. Also, unemployment ticked up to 4.6% - a six-month high - from 4.5% in June.
Shares fell on the weaker-than-expected US jobs data offset the latest in positive earnings reports from such companies as British Airways.
The UK's FTSE 100 index slipped 1.2% to 6,224.30, the German DAX 30 index slid 1.3% to 7,435.67 and the French CAC-40 index dropped 1.5% to 5,597.89.
British Airways gave up earlier gains to end the day down 0.02% after reporting a 75% jump in first-quarter profit and saying it's aggressively reining in expenses.
Overnight gains on Wall Street helped lift most Asian markets, though Tokyo's markets had a mixed day with players planning to watch US markets for further clues on direction.
Stocks in China rose to a new record high, and South Korea and Taiwan stocks gained. Share prices in Indonesia and the Philippines fell.
In Hong Kong, shares edged higher as Chinese banks and insurers rose on strong earnings prospects for the country's financial sector, with overnight gains on Wall Street also boosting the benchmark index.
The blue chip Hang Seng Index rose 95.19 points, or 0.4%, to 22,538.44.
In Japan, the benchmark Nikkei 225 index shed 4.25 points, or 0.03%, on the Tokyo Stock Exchange to 16,979.86 points. The broader Topix index of all the exchange's first section shares rose 3.21 points, or 0.19%, to 1,672.54 points.
The dollar slipped as the euro surged following a pair of discouraging US economic reports and amid worries about a potential credit crunch.
The 13-nation euro rose to a high of $1.3818 before settling back at $1.3801 in late New York trading. That was up from $1.3693 the night before.
The dollar fell to 118.41 Japanese yen from 119.10 yen late Thursday, while the British pound climbed to $2.0447 from $2.0357.
In other New York trading, the dollar bought 1.0528 Canadian dollars, slipping from 1.0530.
Gold for December delivery gained $7.80 to settle at $684.40 an ounce on the New York Mercantile Exchange. Silver rose 16.3 cents to close at $13.158 an ounce.
The energy market was unsettled, as a US lagging job market could bode ill for the economy and slow demand for oil.
Light, sweet crude for September delivery settled at $75.48 on the Nymex, down $1.38 for the session and 2% for the week. Gasoline futures fell 0.72 cent to close at $2.029 a gallon.