Bear Stearns lived up to the "bear" part of its name Friday, with new troubles for the investment bank once again dimming hopes for a speedy recovery in the credit markets.

The major indexes all fell more than 2%. The Dow Jones Industrial Average fell 281.42 points to 13181.91, with selling accelerating in the final hour of trading. Every one of the blue-chip index's 30 companies ended the day in the red. This was the third-biggest one-day loss for the index this year, and it is now 5.8% below its record-high close, set on...