Market ends lower, Dow on cusp of bear market

By Kristina Cooke

NEW YORK (Reuters) - Stocks fell on Friday, pushing the Dow to the brink of a bear market, hounded by concerns that record oil prices and the seemingly endless credit crisis will further damage the economy.

Friday's decline built on Thursday's rout in which the Dow fell about 360 points, and rounded out its worst week since February 10.

While the blue-chip Dow average briefly dipped into bear market territory, it managed to close above that level, thus narrowly avoiding the official onset of a bear market, or a 20 percent drop from its all-time high.

As the price of oil crossed $142 for the first time, shares of companies that sell everything from fast food to soap slid as fears mounted that consumers will need to cut back. Procter & Gamble (PG.N) shares lost almost 3 percent.

Financial stocks were the top drag on the S&P 500. Merrill Lynch's MER.N shares fell after Lehman Brothers forecast Merrill would write down another $5.4 billion in the second quarter. In addition, Moody's Investors Service said it may cut Morgan Stanley's (MS.N) credit ratings.

"We are already in a bear market. You see fundamentally sound companies being punished for the overall performance of indexes," said Peter Kenny, managing director at Knight Equity Markets in Jersey City, New Jersey. "Even the good ships get stranded on the beach when the tide goes out,"

The Dow Jones industrial average .DJI dropped 106.91 points, or 0.93 percent, to end at 11,346.51. During the session, the Dow dropped below 11,331.62, or more than 20 percent below its October 9 closing high.

The Standard & Poor's 500 Index .SPX fell 4.77 points, or 0.37 percent, to close at 1,278.38, while the Nasdaq Composite Index .IXIC slipped 5.74 points, or 0.25 percent, to 2,315.63.