(Agencies)
Updated: 2008-01-12 11:58

NEW YORK -- Wall Street plunged again Friday amid renewed fears that the financial sector's troubles with bad credit won't soon end and that some consumers are buckling under the effects of a slowing economy. The Dow Jones industrials finished down nearly 250 points.

The arrival of earnings season has investors worried about how banks and brokerages have fared after suffering losses in the collapse of the subprime mortgage market. Traders appeared to grow more pessimistic ahead of reports next week from the nation's biggest financial institutions. Merrill Lynch & Co., Citigroup Inc. and JPMorgan Chase & Co. are all slated to weigh in next week.

Adding to investors' unease, Merrill Lynch might take a $15 billion hit from its exposure to soured subprime mortgage investments, according to The New York Times. The nation's largest brokerage is also said to be seeking another capital infusion to help shore up its balance sheet.

Investors also grew nervous after American Express Corp. warned late Thursday that slower spending and more delinquencies on credit card payments will hamper profit throughout 2008. A profit warning from Tiffany & Co. added to Wall Street's unease about the fortitude of the consumer.

"When Amex comes out and says that some of their well to do cardholders are having problems making payments that's just not good news," said Brandon Thomas, chief investment officer of Portfolio Management Consultants, the investment arm of Envestnet Asset Management.

Friday's session revealed the extent of investors' misgivings about the financial sector's efforts to sew up its troubles. Bank of America Corp. agreed Friday to buy Countrywide Financial Corp. for $4 billion, a deal that rescues the country's largest mortgage lender but pays less than the company's market value.

The agreement comes after word of the move Thursday and just months after BofA invested $2 billion in Countrywide. Some investors apparently hoped Countrywide would fetch a premium, though some observers said a tie-up was a better alternative for the beleaguered company.

Michael Church, portfolio manager at Church Capital Management in Philadelphia, said news from the financials is weighing on Wall Street, although he said few investors should be surprised that troubles in the sector remain.

"The financials are going to continue to be a problem," he said.

The Dow fell 246.79, or 1.92 percent, to 12,606.30. The Dow had been down more than 300 points in the last hour.

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