Stocks plunged at the opening bell Friday as fears about the implications of a potential government rescue of troubled mortgage giants Fannie Mae and Freddie Mac rippled through the market.
The Dow industrials were down more than 100 points in the first few minutes of trading and Fannie Mae and Freddie Mac were off nearly 50 percent.
The S&P 500 index, which crawled -- barely -- out of bear-market territory on Thursday, plunged back into the clutches of the bear. The Dow and Nasdaq were already there.
The market was gripped with fear that a Fannie and Freddie bailout would wipe out investors.
Not even perennial optimist Jack Bouroudjian, of Brewer Investment Group, could find a positive spin on the Fannie and Freddie situation.
"The only optimism today is the fact that if you’re long GE stock, you’re probably the only one smiling," Bouroudjian said on CNBC. "What we’re looking at right now … is a lack of response … confidence that is completely washed away from these stocks but more importantly, the market collectively is holding its ear out, waiting for something to be done," he said.
"Sometimes, I feel as if we're in ancient Rome and Nero is playing the fiddle while Rome is burning around us," Bouroudjian said.
General Electric, parent of CNBC, met earnings expectations -- a welcome relief after last quarter's dismal miss -- but said it expects its third-quarter profits to be flat or down at its finance arms.
GE set about jettisoning its Japanese consumer finance operation, ahead of the numbers, for $5.4 billion to Japan's Shinsei Bank. This comes a day after the conglomerate announced plans to spin off its consumer and industrial units, which include the appliances and lighting divisions.
GE shares slipped less than 1 percent.
Among other financials in traders' crosshairs today: Lehman Brothers tumbled 18 percent.
The whole sector took a hit -- even JPMorgan , whose exposure to credit issues is less than many of the other Wall Street titans, dropped more than 3 percent.
Banks fell sharply, with Bank of America, Washington Mutual and Wachovia all down more than 4 percent.
Adding to the market's jitters, again jumped more than $5 a barrel, approaching $147 a barrel amid fears of supply disruptions and weakness in the dollar.
In economic news, the U.S. trade deficit shrank unexpectedly in May, as both exports and imports hit record highs and the average price for imported oil surged. The trade gap narrowed to $59.8 billion in May, from a slightly downwardly revised estimate of $60.5 billion for April.
A separate report showed import prices rose 2.6 percent in June, though most of that was due to energy prices. Excluding energy, import prices were up 0.9 percent. Export prices climbed 1 percent.
Citigroup also looked to streamline its operations and raise capital by selling its German retail business to France'sCredit Mutuel for $7.7 billion. Citi shares fell more than 2 percent.
Meanwhile Apple's "second coming" iPhone got a hot reception, with buyers storming stores in Asia and queues forming in European cities. Investors were less enthused, though, sending shares down 1 percent.