Market diary.

The markets pulled back during the week ending July 25, spooked by evidence that the fallout from the mortgage lending crisis was more widespread than initially believed. Calabasas-based Countrywide Financial Corp., the nation's No. 1 mortgage lender, reported in its second quarter earnings that defaults were rising even among prime mortgage borrowers. Besides sending Countrywide's stock down 12 percent, that news on July 24 sent all the major markets lower as investors feared tighter credit would hamper economic growth. After closing above 14,000 for the first time on July 19, the Dow Jones Industrial Average fell 1 percent to close on July 25 at 13,785.10. The Nasdaq and Standard & Poor's 500 indices fell nearly 2 percent to close at 2,648.17 and 1,518.09 respectively. The LABJ index of 200 local stocks plunged 2.6 percent as 148 stocks declined and only 43 advanced. All but two of the 18 industry sectors declined, led by a 10.6 percent drop in financial services, which saw 14 stocks hit 52-week lows. Another company wracked by the mortgage lending crisis. Fremont General Corp., was the biggest losing stock, down 29 percent to $7.39 per share. One of the few bright spots was Cougar Biotechnology Inc., whose stock soared 10 percent after the company received permission from the U.S. Food and Drug Administration to proceed with clinical trials for a cancer treatment drug.