US stocks fell sharply on Friday, with all three major averages down over 1 percent, as a pair of troubled Bear Stearns hedge funds stoked concerns that other investment banks may face large losses from subprime mortgages.
Further weighing on financials, the US Congress introduced a bill to end the carried interest tax advantage, a move seen as targeting investment fund managers. The bill coincides with the stock market debut of the Blackstone Group LP, the largest private equity fund to go public.
Wall Street banks unwound positions this week in two Bear Stearns Cos. Inc hedge funds heavily invested in subprime home loans, reigniting concerns about wider fallout.
The Dow Jones industrial average was down 149.98 points, or 1.11 percent, at 13,395.86. The Standard & Poor's 500 Index was down 17.01 points, or 1.12 percent, at 1,505.18. The Nasdaq Composite Index was down 27.05 points, or 1.03 percent, at 2,589.91. Decliners were outnumbering advancers by a wide margin on the NYSE. All but one of the Dow's 30 components were trading lower.
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