NEW YORK (AP) _ It felt like another cold day on Wall Street.
Though it was balmy outside, Wall Street's spasms Thursday in some ways resembled those of the pullback this past winter that marked the stock market's worst session in 5 1/2 years. On Thursday, as in late February, investors grappled with concerns about whether mortgages made to borrowers with poor credit would show another spike in defaults and trigger a broader economic slowdown.
Investors also grew uneasy that tightening credit standards would make it more expensive to put together the deals that have given a boost to corporate profits, enriched stockholders, and kept the stock market climbing in recent years.
The Dow Jones industrial average ended down more than 310 points, or 2.26 percent, after sliding nearly 450 points in afternoon trading. Broader market indicators also fell. The Nasdaq composite index fell 1.84 percent, while the Standard & Poor's 500 lost 2.33 percent.
Investors remained anxious and pessimistic Friday, and stocks fell further, with the Dow dropping 208 points, bringing its two-day decline to more than 500.
Back in February, the story was even worse, with the Dow ending down 416 points. But the markets saw a quick recovery in the weeks that followed. Whether observers see Thursday's decline as a sign the economy is poised to take a hit from an unraveling housing market or as merely a hiccup, many say the fundamental economic story didn't change overnight.
``I don't know that this is the end of it,'' said Neil Massa, senior trader at MFC Global Investment Management in Boston. Beyond subprime mortgages, he said investors are facing a panoply of concerns such as the availability of credit, uncertainty about the stamina of consumer spending and an anemic U.S. dollar.
These potential economic pitfalls aren't new and Wall Street has in recent months vacillated on whether the economy can sidestep these troubles. Only last week, investors swatted away such worries and sent the Dow above 14,000 for the first time and drove the S&P 500 to new highs as well.
But the pullback had been brewing, Massa said. ``It was inevitable.''
Even absent the concerns that clouded the mood on Wall Street Thursday, the market's rise in the past year dictated investors take a break, said Al Goldman, chief market strategist at A.G. Edwards in St. Louis.
In the three weeks before Thursday, the Dow had risen 5 percent, while the S&P 500 gained 4 percent and the Nasdaq added 5.7 percent.
``The basic problem in the market is that we've been up, up and away and needed a correction,'' he said. ``This has been a bull market for 57 months.''
But he contends the sell-off was overwrought and that some investors have been waiting on the sidelines for a chance to snatch up some bargains.
``What I saw in the market was panic selling. There were no prisoners taken. Everybody was taken out and shot. I don't think this is going to develop into a 10 percent correction.''
Goldman and other longtime Wall Street players point out that the global economy remains strong, even as the U.S. economy has slowed. But growth elsewhere still helps many U.S. companies that can reap big profits from sales abroad. They also get a weak dollar has made U.S. goods cheaper overseas.
But even with strength elsewhere, investors fretted Thursday in part over a potential disappearance of the easy credit that has bankrolled a stream of buyouts on Wall Street. Such dealmaking has been one of the stock market's big drivers.
``The case is not quite as strong for the buyouts,'' said Jerry Webman, chief economist at Oppenheimer Funds Inc. ``We've reached a point where some major financial institutions have some loans on their books they can't move.
``What was financeable just a few weeks ago is not financeable now.''
If subprime and credit concerns continue to roil the markets, some observers see room for the Federal Reserve to step in and perhaps lower short-term interest rates. The central bank has held rates steady for a year in a bid to stave off inflation.
``Though the Fed worries about inflation, it's kind of going to be hard for them to ignore the lack of growth that we're going to be seeing. The only way we're going to see that is by lowering rates. The market is now pricing in at least one rate cut by end of year,'' Massa said.
Last week, he noted, the bond market saw little to no chance of a rate cut this year.
On Thursday, a jump in Treasury prices sent yields on the benchmark 10-year note plunging to 4.79 percent from 4.90 percent Wednesday.
While it is too soon to tell how Wall Street might reconcile some of its concerns, investors would be well-served, observers say, not to panic and to remember that the markets bounced back after the Feb. 27 sell-off.
In fact, Goldman sees opportunity.
``The best time to buy stocks is when you're least comfortable buying stocks.''