Stocks dropped sharply as soon as trading opened today after a French bank, BNP Paribas, suspended operations of three of its funds in the wake of turmoil in the American market for home loans and the European Central Bank and the Federal Reserve injected cash into the financial system because of tightening credit markets.

The Dow Jones industrial average fell more than 200 points, or 1.5 percent, while the Standard & Poor’s 500-stock index and the Nasdaq composite index were down just as much. Stocks remained volatile through the morning, and at 11:40 a.m., the Dow was down about 140 points, or 1 percent. The S.&P. 500 was off by about 1.2 percent, while the Nasdaq was down about 0.5 percent.

Asked at a news conference this morning whether he thought the turmoil in the subprime lending market could put a chill on credit in the broader economy, President Bush said, “The fundamentals of our economy are strong,” adding, “I’m told there is enough liquidity to enable the system to correct.”

The market appeared to react positively to remarks by Mr. Bush that the administration would not favor changing the way partners in private equity firms are taxed. In recent months, several prominent lawmakers have proposed subjecting the investment gains of fund managers  known as “carried interest”  to the ordinary income tax rate of up to 35 percent, rather than the capital gains rate of 15 percent.