Stocks Plunge Into the Weekend

Updated from 4:01 p.m. EDT

Stocks plunged into the close Friday as troubling debt-related comments from Bear Stearns (BSC Quote - Cramer on BSC - Stock Picks) sent the New York market spiraling downward.

The Dow Jones Industrial Average tanked 281.42 points, or 2.09%, to 13,181.91. The S&P 500 tumbled 39.14 points, or 2.66%, to 1433.06, and the Nasdaq ended down 64.73 points, or 2.51%, at 2511.25.

"On a Friday during the summer months, you're going to see this type of large decline as the negative tone keeps feeding upon itself," said Art Hogan, chief market analyst with Jefferies. "The buyers packed up their bags once we picked a direction this morning, and there was no changing it."

Bear Stearns fell hard after finance chief Sam Molinaro said during a conference call that the credit market was "about as bad as I've seen it in 22 years." Following that observation, the stock indices went into a tailspin.

For Bear Stearns itself, it was a two-pronged skid. Earlier it was because Standard & Poor's cut its rating outlook for the broker to negative from stable.

Though the shares recovered, they sank again once the call got underway. Bear Stearns, which has lost 19% over the last month amid liquidity problems at some of its mortgage-related funds, finished down another 5.9% to $108.79.

Also weighing on the mood was the news that lender American Home Mortgage (AHM Quote - Cramer on AHM - Stock Picks) is slashing roughly 90% of its work force, and published reports now say the company will shut down after failing to find a buyer for its operations.

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