Stocks slide Friday on credit concerns

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NEW YORK -- U.S. stocks plunged for a second day Friday, in the worst week for the S&P 500 in nearly five years, as tightening credit conditions led to concerns that takeovers would slow.

Losses accelerated in the final minutes of trading, taking the Dow industrials down more than 200 points, a day after an equities sell-off that wiped out more than $300 billion in the value off the S&P 500.

"We've had this massive change in investor expectations in terms of new deal flow," said Fred Dickson, market strategist, director of retail research, D.A. Davidson & Co. Lake Oswego, Oregon. "The lifeguards have shouted, and investors are now starting to heed their warnings and head back to shore."

Investors fear increasing deterioration in credit markets would hurt chances for more corporate buyouts and dry up funding, and that losses in the subprime mortgage market may spill over into the broader economy.

A nearly 3% rise in oil prices to their second-highest settlement on record added to worries about the economy. Energy company shares, however, led decliners on the S&P 500. Exxon Mobil Corp., which reported worse-than-expected results this week, dropped 3%.

The Dow Jones industrial average fell 208.10 points, or 1.54%, to end at 13,265.47. The Standard & Poor's 500 Index was down 23.71 points, or 1.60%, at 1,458.95. The Nasdaq Composite Index was down 37.10 points, or 1.43%, at 2,562.24.

For the week, the Dow fell 4.2%, the S&P dropped 4.9% and the Nasdaq declined 4.7%.

The S&P suffered its worst one-week percentage drop since September 2002, while the Dow fell 585 points on the week, the biggest weekly point drop since July 2002.

Trading was heavy on the New York Stock Exchange, with about 2.23 billion shares changing hands, above last year's estimated daily average of 1.84 billion, while on Nasdaq, about 2.7 billion shares traded, above last year's daily average of 2.02 billion.

Declining stocks outnumbered advancing ones by a ratio of about 11 to 5 on the NYSE and by 7 to 3 on Nasdaq.
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