Stormy weather on Wall Street

NEW YORK (CNNMoney.com) -- Stocks slumped Friday, falling for a second session in a row, as accelerating worries about the tightening of credit and the subprime mortgage fallout dragged on investor sentiment.

However, stocks cut losses after the Federal Reserve injected an additional $16 billion into the banking system, following the morning's addition of $19 billion.

The Dow Jones industrial average (down 151.85 to 13,118.83, Charts) fell 81 points about 100 minutes into the session, after slumping 387 points on the previous day, its second biggest one-day point and percentage decline of the year.

The Dow was down over 200 points, its lows for the morning, just before the Fed's announcement.

The broader S&P 500 (down 8.87 to 1,444.22, Charts) index gave up 0.8 percent, adding to Thursday's nearly 3 percent slump.

The tech-fueled Nasdaq Composite (down 24.73 to 2,531.76, Charts) index tripped 1.1 percent, adding to the previous session's 2.2 percent slide.

Bond prices rose in tandem, sending the corresponding yields lower, as investors made a classic 'flight-to-quality' move into the comparatively safer haven of bonds.

Stocks slumped Thursday as worries about a tightening of the global credit market resurfaced, sparking a broad decline in stocks in the U.S. and abroad.

Those worries continued Friday, after the European Central Bank (ECB) pumped extra cash into the system for a second day in a row, as a means of calming nervous trader. The ECB added $83 billion in liquidity Friday.

The Federal Reserve followed suit, adding $19 billion in temporary reserves. The move was the biggest single temporary open market operation in four years, the New York Federal Reserve said, according to Reuters. In the late morning, the central bank said it was adding an additional $16 billion.

Futures markets show traders expect the Federal Reserve to cut interest rates on Sept. 18, the next policy meeting. However, there is also some speculation that the central bank could cut rates ahead of that meeting.

Stocks have been whipsawed over the last few months on fears about tightening credit after a period of widespread liquidity.

At the same time, investors have been trying to sort out the implications of the fallout from the subprime mortgage market - loans made to consumers with less than ideal credit - amid the slumping housing market.

Stock declines were broad-based, with 26 out of 30 Dow components falling, led by American Express (down $1.56 to $59.09, Charts, Fortune 500), Alcoa (down $1.56 to $33.88, Charts, Fortune 500), General Electric (down $1.39 to $37.55, Charts, Fortune 500), Microsoft (down $0.71 to $28.59, Charts, Fortune 500), Boeing (down $3.14 to $95.16, Charts, Fortune 500) and Honeywell (down $2.37 to $54.41, Charts, Fortune 500).

Countrywide Financial (down $1.96 to $26.70, Charts, Fortune 500) slipped after saying in a regulatory filing that unprecedented disruptions in the mortgage market pose a threat to its financial state.

Market breadth was negative. On the New York Stock Exchange, decliners beat advancers 5 to 1 on volume of 680 million shares. On the Nasdaq, losers topped winners 3 to 1 on volume of 875 million shares.

In global trade, European stocks fell in the afternoon, and Asian markets ended lower.

Treasury prices rose, sending the benchmark 10-year note yield down to 4.74 percent from 4.77 percent late Thursday. Bond prices and yields move in opposite directions.

In currency trading, the dollar was flat versus the euro and slumped versus the yen.

U.S. light crude oil for September delivery fell 81 cents to $70.78 a barrel on the New York Mercantile Exchange.