Stocks endure wild day on credit angst

By Caroline Valetkevitch

NEW YORK (Reuters) - Blue-chip stocks slipped, while the broader market edged higher on Friday after the Federal Reserve injected cash to shore up the banking system and ease anxieties over looming losses related to subprime mortgages.

As in previous sessions during a week of wild swings, the market shifted direction dramatically in the last hour of trade, with the S&P 500 ending higher, while the Nasdaq and Dow finished well off their session lows.

In an effort to calm the market, the U.S. Federal Reserve added cash to the banking system three times -- $38 billion in all -- and issued a statement that it would provide sufficient funds to prevent disruptions. It was the first time it had made such assurances since the September 11 attacks six years ago.

"People want to see how deep are these mortgage losses and how many creditors are really affected," said Andrew Kanaly, chairman of Kanaly Trust Co., an investment advisory firm based in Houston, Texas. "Remember the old adage: Markets can discount good news and discount bad news, but can't discount what they don't know."

Investors worried that fallout from the subprime problems would make credit conditions tighter in the corporate and mortgage lending markets, and would impact profits and the economy.

Shares of industrial conglomerates were among the top drags on the Dow. Caterpillar Inc. declined 1.2 percent to $77.55.

The Dow Jones industrial average fell 31.14 points, or 0.23 percent, to end at 13,239.54. Earlier in the session, the Dow lost more than 200 points as it slid to a session low at 13,057.86.

But the Standard & Poor's 500 index inched up just 0.55 of a point, or 0.04 percent, to finish at 1,453.64. Earlier, the S&P 500 dropped to a session low at 1,429.74.