Jitters back - Dow sinks 150

Investors again get spooked by credit market fears, just a day after Dow posts second biggest point loss this year.

By David Ellis, CNNMoney.com staff writer

NEW YORK (CNNMoney.com) -- Stocks tumbled for a second day Friday, with the Dow industrials sinking as much as 150 points on fresh jitters about the credit markets and a jump in oil prices.

The Dow Jones industrial average (down 135.75 to 13,337.82, Charts) sank about 0.9 percent more than three hours into the session after falling about 150 points earlier. The broader S&P 500 (down 17.14 to 1,465.52, Charts) and the tech-fueled Nasdaq composite index (down 33.30 to 2,566.04, Charts) each lost rouhgly 1 percent.


Treasury bonds rallied for a second session as investors again sought shelter from falling stock prices while higher oil prices pressured equities.

"You have all these worries out there," said Warren Simpson, managing director at the Little Rock, Ark.-based Stephens Capital Management. "Between the subprime situation and the price of oil and consumer spending and throw housing over everything - you've got a nervous market."

Credit market fears and more troubling news from the housing sector sent stocks tumbling Thursday, with the Dow falling 311 points - its second biggest point loss so far this year.

More troubling news emerged Friday after the Britain-based snack and drinkmaker Cadbury Schweppes (up $0.51 to $48.95, Charts) delayed the sale of its North American beverage unit, citing recent turmoil in the debt market.

Not including the Cadbury announcement, there have been roughly 20 buyout-related debt deals that have been postponed as credit markets have tightened.

Investors around the world have been rattled by signs of tougher conditions in credit markets, since tighter credit is likely to slow the buyout boom that's helped prop up stock prices. And it could raise the cost of borrowing for companies, hurting corporate earnings.

The Dow selloff, which has cut the index's gain to about 8 percent for the year, paused briefly after Treasury Secretary Paulson said in a televised interview that the U.S. economy is the strongest he has seen in several decades, helped by growth outside the U.S.

His comments came after the Commerce Department reported the economy grew at a faster-than-expected pace of 3.4 percent in the second quarter, while a key inflation reading came in tamer than expected.

In other economic news, the University of Michigan reported an uptick in consumer sentiment in July in its monthly survey, although the reading fell short of estimates.

On the earnings front, Chevron (down $1.92 to $85.54, Charts, Fortune 500) reported improved quarterly earnings, while leading biotech Amgen (down $0.77 to $55.39, Charts, Fortune 500) reported a better-than-expected gain in earnings after the closing bell Thursday.

In corporate news, Gap (up $0.60 to $17.51, Charts, Fortune 500) shares climbed nearly 4 percent after the apparel maker announced late Thursday that it had named Glenn Murphy as the company's new CEO.

And the European Union's top antitrust regulator charged Friday that Intel (down $0.34 to $23.66, Charts, Fortune 500) tried to use its huge market share to push smaller rival Advanced Micro Devices (down $0.78 to $13.95, Charts, Fortune 500) out of the central processing unit (CPU) business.

Treasury bonds climbed again after a big runup Thursday, with the 10-year note yield at 4.76 percent, down from 4.78 percent in the previous session. Bond prices and yields move in opposite directions.

The dollar climbed against the euro and edged higher versus the yen.

Oil prices jumped above $76 a barrel for a time, but remained higher with U.S. light crude up 80 cents to $75.75 a barrel on the New York Mercantile Exchange.

COMEX gold for December fell $3.10 to $672 an ounce.

The triple-digit loss also pummeled stocks overseas as Asian markets finished sharply lower. In Europe, stocks seesawed before finishing lower. Top of page