NEW YORK (AP) – Stocks fell sharply Friday following weaker-than-expected economic readings and amid fresh concerns that soured subprime mortgages will ignite a credit crunch. The Dow Jones industrials at times were down more than 100 points.

The final session of a volatile week also saw a notable rise in the bond market, with the yield on benchmark 10-year Treasury note falling to 4.70 percent from 4.77 percent late Thursday. Bond prices move opposite yields.

Stocks pulled back Friday afternoon after comments from Bear Stearns Cos. Chief Financial Officer Sam Molinaro stirred concerns that weakness in the credit market was widespread.

Coming off two straight days of triple-digit gains in the Dow, stocks fell earlier after the government said jobs growth was not as strong as expected last month and a trade group reported that the nation’s service sector grew at a slower pace than expected in July.

Credit concerns, which have dogged investors for months and have roiled markets since last week, weighed on investor sentiment again Friday. Standard & Poor’s Ratings Services lowered its credit outlook on Bear Stearns Cos. to negative from stable because of the investment bank’s exposure to the distressed mortgage and corporate buyout markets. The stock at times fell to levels not seen since November 2005; in the early afternoon it was down $3.06, or 2.7 percent, at $112.57.

“I think there is a tremendous amount of uncertainty with regard to the credit markets and how the situation will ultimately settle,” said Mile Malone, trading analyst at Cowen & Co.

In midafternoon trading, the Dow fell 110.55, or 0.82 percent, to 13,352.78.

Broader stock indicators also declined. The Standard & Poor’s 500 index dropped 19.92, or 1.35 percent, to 1,452.28, and the Nasdaq composite index fell 32.52, or 1.26 percent, to 2,543.46.

The stock market made late-day surges both Wednesday and Thursday, but trading has been nervous and wavering. Investors remain worried that problems in subprime mortgages – those made to borrowers with poor credit histories – will force lenders to make credit less available. When people and companies can’t borrow money as easily, the economy tends to slow down.

“There is not going to be one sort of clear signal that suggests everything is OK,” Malone said, referring to the subprime worries. “I think it’s going to take time and the equity markets are going to experience heightened volatility.”

The unease over the mortgage market and tightening credit dragged down financial stocks, which have been hard hit in recent weeks. Lehman Brothers Holdings Inc. fell $4.69, or 7.7 percent, to $55.76; its previous 52-week low was $58.85. Merrill Lynch & Co. fell $2.96, or 4.1 percent, to $69.59. During the session the stock fell below its previous 52-week low of $69.14.

Investors also fled lenders. American Home Mortgage Investment Corp. confirmed late Thursday it has stopped taking mortgage applications and is laying off most of its 7,000 staffers. American Home dropped 75 cents, or 52 percent, to 70 cents.

Countrywide Financial Corp. fell $1.77, or 6.6 percent, to $25. The nation’s biggest mortgage lender said 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 for July fell 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.

In other corporate news, Procter & Gamble Co., one of the 30 components of the Dow industrials, reported a rise in quarterly profit that beat expectations and announced plans to repurchase stock. P&G rose 18 cents to $63.48.

Toyota, poised to overtake General Motors Corp. this year as the world’s biggest automaker, said profit in the most recent quarter soared 32 percent amid strong overseas sales and a weaker yen. Toyota’s U.S. shares rose 81 cents to $119.40.

Crude oil futures fell $1.20 to $75.66 per barrel on the New York Mercantile Exchange. Crude closed at a record $78.21 a barrel on Tuesday.

The dollar fell against most other major currencies, while gold prices rose.

Declining issues outnumbered advancers by about 3 to 1 on the New York Stock Exchange, where volume came to 1.41 billion shares.

The Russell 2000 index of smaller companies fell 17.44, or 2.22 percent, to 766.55.

In Asian trading, Japan’s Nikkei stock average fell 0.03 percent, Hong Kong’s Hang Seng index rose 0.4 percent, and China’s Shanghai Composite Index rose 3.5 percent.

In European trading, Britain’s FTSE 100 fell 1.21 percent, Germany’s DAX index fell 1.31 percent, and France’s CAC-40 fell 1.48 percent.

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AP-ES-08-03-07 1456EDT