Statement behind Dow drop

NEW YORK -- Wall Street 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. Chief Financial Officer Sam Molinaro, who described turmoil in the credit market as the worst he had seen in 22 years.

"I think there is a tremendous amount of uncertainty with regard to the credit markets and how the situation will ultimately settle," said Mike Malone, trading analyst at Cowen & Co.

Investors remain worried that problems in sub-prime mortgages -- those made to borrowers with poor credit histories -- will force lenders to make credit less available. When people and companies can't borrow money as easily, the economy tends to slow down.

The Dow fell 281.42, or 2.09 percent, to 13,181.91. Despite the day's loss, the index was off only 0.63 percent for the week.

Broader stock indicators also fell sharply Friday. The Standard & Poor's 500 index dropped 39.14, or 2.66 percent, to 1,433.06, and the Nasdaq composite index fell 64.73, or 2.51 percent, to 2,511.25.

For the week, the S&P fell 1.77 percent, while the Nasdaq fell 1.99 percent.

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 percent decline puts the Dow more than halfway toward the technical threshold of a correction, which is 10 percent.