Updated: 3 p.m. ET.

You don't normally expect the stock market to slump as badly as it did on Friday, the day after Thanksgiving. 

Between 1999 and 2008, in fact, the stock market has seen just two down days on the day after Thanksgiving.

But normally you don't have the city-state of Dubai precipitating a global financial crisis when it called for a delay of six months on any debt repayment from its Dubai World industrial conglomerate.

The Dow Jones industrials ($INDU) closed down 154 points, or 1.5%, to 10,310. The Standard & Poor's 500 Index ($INX) dropped 19 points, or 1.7%, to 1,091, and the Nasdaq Composite Index ($COMPX) fell 38 points, or 1.4%, to 2,138.

The losses were broad: All 30 Dow stocks were lower, along with 496 S&P 500 stocks and 97 stocks in the Nasdaq-100 Index ($NDX.X). The Dow and Nasdaq finished down slightly for the week, and the S&P 500 was flat.

The fear is that losses in the small emirate, which has drawn wealthy tourists from around the globe in the past decade with its Las Vegas-in-the-Middle East appeal, could imperil a nascent economic rebound.

That worry will weigh on markets next week. Here's why. 

By Melinda Peer, TheStreet.com

(Updated at 1:15 p.m. EST) Stocks fell in New York on Friday amid concerns about Dubai’s debt after the emirate sought to delay repayment.

The S&P 500 Index sank 19 points, or 1.7%, to 1,091. The Dow Jones Industrial Average declined 154 points, or 1.5%, to 10,310, and the Nasdaq dropped 38 points, or 1.7%, to 2,138.

Reaction to the news in Dubai will be felt across U.S. markets today after the Thanksgiving holiday, although trading is expected to be sparse during today’s abbreviated session. With no economic reports and few earnings results expected, the focus Friday in the U.S. will be on retailers vying for consumers' business on Black Friday. Trading on the major U.S. exchanges will stop at 1 p.m.

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American International Group (AIG) said late today that it has settled its long-running legal battle with former CEO  Maurice "Hank" Greenberg in an attempt to move past years of contentious fighting.

Among the terms of the settlement, which also applied to former AIG chief financial officer Howard Smith and two firms associated with Greenberg -- C.V. Starr & Co. and Starr International -- is the release of the parties from all claims.

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AIG may pay up to $150 million in legal claims made by Greenberg and Smith. A mediator will determine the amount.

AIG also agreed to turn over some photographs of Greenberg, a Persian rug in the company’s headquarters and other personal items. The firm will also give him access to some archival material to help him write his memoirs.

Both sides have agreed to refrain from publicly disparaging the other.

One of first lady Michelle Obama's favorite stores had a great third quarter and looks like it will enjoy the holidays.

Investors sure thought so today. Shares of J. Crew Group (JCG) jumped 7.8% to $44.03.

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Late Tuesday, the clothing retailer posted third-quarter net income of $43.9 million, or 67 cents per share, up from $19 million, or 30 cents per share, in the same quarter a year ago.

Revenue rose 14% to $414.1 million. Analysts had been looking for earnings of 58 cents per share on $406.6 million in revenue.

Updated: 6:40 p.m. ET

A modest rally ahead of the Thanksgiving holiday pushed the Dow Jones industrials ($INDU)  and the Standard & Poor's 500 Index ($INX) to new highs for the year.

The rally was fueled by better-than-expected new-home sales and a drop in jobless claims.

Gold, meanwhile, closed at a record $1,187 an ounce, up $21.20 from Tuesday.

Markets will be closed Thursday for Thanksgiving and will be open for a half-day on Friday.

The Dow closed up 31 points to 10,464. That was 13 points above 10,451, its previous high close for 2009, set on Monday.

The S&P 500 was up 5 points to 1,111. The Nasdaq Composite Index ($COMPX), meanwhile, finished with a 7-point gain to 2,176, its fourth-best close of the year.