Stocks Fall Sharply Amid Credit Fears3

Countrywide Financial Corp. fell $1.77, or 6.6 percent, to $25. The nation's biggest mortgage lender said late Thursday it has adequate access to cash and isn't facing the liquidity crunch that is hitting dozens of other smaller players.

In economic news, which didn't provide much reason for investors to look past the mortgage and credit concerns, the Labor Department said nonfarm payrolls rose 92,000 last month, less than the 132,000 jobs created in June and below the average forecast of about 135,000. Also, unemployment ticked up to 4.6 percent a six-month high from 4.5 percent in June. Still, overall unemployment remains low, analysts noted.

Also, the Institute for Supply Management said its non-manufacturing index, which measures service sector activity, fell in July to 55.8 from 60.7 in June. Wall Street had expected a reading of 59, according to Thomson Financial/IFR.

Investors still uncertain about the effect of rising subprime mortgage defaults on the broader economy have regarded the stable job market and consumer spending as signs the economy might hold up despite a tighter lending climate. That's because people with steady paychecks are more likely to keep spending and pay back their debt. At the same time, some pullback in employment might ease some concerns about wage inflation.

"I think the ISM and the jobs numbers are going to accelerate the general consensus view that maybe the economy is slower than anticipated," said Subodh Kumar, global investment strategist at Subodh Kumar & Assoc.

"The market has become very much driven from data point to data point because of uncertainty of a number of issues," he said, citing unease over credit, oil prices, and a weak dollar.

Crude oil futures settled down $1.38 at $75.42 per barrel on the New York Mercantile Exchange after the employment report suggested the economy could slow and demand for oil could fall. Crude closed at a record $78.21 a barrel on Tuesday, though ended the week 2 percent lower.

Declining issues outnumbered advancers by about 5 to 1 on the New York Stock Exchange, where consolidated volume came to 4.54 billion shares compared with 4.18 billion traded Thursday.