Stocks Plunge Into the Weekend

Earlier this week, American Home said its backers had cut off its credit and that one of the options that it would consider was liquidation. The stock plummeted 52.1% to 69 cents. American Home Mortgage lost 93.4% of its value this week.

A host of housing and mortgage-related stocks have seen punishing selloffs in recent sessions as investors fled at the first whiff of trouble.

Countrywide (CFC Quote - Cramer on CFC - Stock Picks), Accredited Home Lenders (LEND Quote - Cramer on LEND - Stock Picks) and Beazer Homes (BZH Quote - Cramer on BZH - Stock Picks) are among those who have endured precipitous drops, regardless of whether the problem was more imagined than real.

Countrywide and Beazer dropped 6.6% and 13.3%, respectively, during the session.

As expected, the financial sector was creamed. The KBW Bank Index tumbled 4.1%, the Nasdaq Financial 100 Index spiraled 3.8% lower, and the NYSE Financial Sector Index dropped 3.1%.

"This problem is going to linger, and every headline is going to cause even more nervousness in the market," said Peter Cardillo, chief market economist with Avalon Partners. "Hopefully, these fears will begin to wane. If the credit crunch story should begin to expand further past these related names, then we can say these fears aren't overblown."

For the market overall, the fear that an unraveling housing sector is threatening to take down the entire economy has meant incredible volatility for the major indices of late.

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