UGH...Enough Said

Stocks got crushed Thursday, plunging right out of the gate; and every attempt to buy on the day's dips was met with even stronger waves of selling pressure.

Renewed fears about credit risk, this time from across the pond, prompted investors to take a deeper look at the severity of the ongoing subprime problem and the difficulties that diminishing liquidity is having on banks and brokers to accurately value assets.

The latest shoe to drop came from BNP Paribas. The French bank halted withdrawals from three of its funds as a lack of liquidity left it unable to fairly value their holdings on account of the turmoil in the U.S. credit market. Also discouraging was the fact that the company's CEO reportedly said just last week that the bank's exposure to U.S. subprime was "absolutely negligible."

The news out of Europe prompted a 50-basis point jump in Libor (London Interbank Offered Rate) to its highest level in six years and prompted the ECB to inject nearly 95 bln euros ($130 bln) into money markets. The Fed also chimed in by adding $24 bln in banking reserves. Such attempts to temporarily ease the pain of a possible credit crunch, however, were viewed with a glass half empty and merely exacerbated the worst of liquidity fears.

Not surprising, given its substantial exposure to mortgage lending and widening credit spreads, the Financial sector (-3.8%) got hammered, slipped further into negative territory for the year. With the most influential sector also the day's weakest link, it was not surprising to see the S&P 500 outpace the Dow and Nasdaq to the downside.

The broader market posted its worst one-day decline (-3.1%) since March 2003. All 10 economic sectors closed sharply lower, plunging 2.9% on average. Of the 147 S&P industry groups, only 10 posted gains.

Retailers were another blemish and were looking weak before the market even opened, as the bulk of July same-store sales figures missed forecasts.

On the NYSE, where trading curbs went into effect an hour before the close, decliners outpaced advancers by a nearly 4-to-1 margin while above average volume showed added conviction on the part of sellers.