Wall Street tumbles as credit fears worsen

NEW YORK – Wall Street plunged anew Friday after a near meltdown at Bear Stearns Cos. handed investors the unwelcome confirmation that the credit market’s troubles are far from over. Word that the investment bank needed rescuing touched off a wave of selling that left each of the major indexes down more than 1.5 percent on the day; the Dow Jones industrial average fell nearly 200 points.

Stocks showed moderate increases in the early going after a Labor Department report showed the Consumer Price Index remained flat for February. Wall Street has been expecting inflation would show an increase. But the gains quickly disappeared after investors learned about the severity of troubles at Bear Stearns.

The Dow fell 194.65, or 1.60 percent, to 11,951.09. The Dow had been down as much as 313 points.

Broader stock indicators also declined but pulled off their lows. The Standard & Poor’s 500 index fell 27.34, or 2.08 percent, to 1,288.14, and the Nasdaq composite index fell 51.12, or 2.26 percent, to 2,212.49.

For the week, the major indexes were mixed, with the Dow showing a modest gain, the Standard & Poor’s 500 index slipping and the Nasdaq composite index showing no change, finishing exactly where it began.

Bond prices jumped as stocks retreated. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 3.42 percent from 3.53 percent late Thursday.

Comments from the Fed might have helped corral some of investors’ nervousness Friday. The central bank said it voted unanimously to sign off on the arrangement between JPMorgan and Bear Stearns and that it is ready to provide further resources to stave off further credit troubles. Fed Chairman Ben Bernanke also said Friday he would do what was possible to aid struggling homeowners.

Still, investors remained nervous. The Chicago Board Options Exchange’s volatility index, known as the VIX, and often referred to as the “fear index,” jumped 18.7 percent.

Overseas, Japan’s Nikkei stock average finished down 1.54 percent. Britain’s FTSE 100 closed down 1.07 percent, Germany’s DAX index fell 0.75 percent, and France’s CAC-40 lost 0.82 percent.