It's banks. Not Stock Market.
The banks were giving out loans to any one. Those blubbering idiots known as "everyone" we're unable to pay back their loans and filed for the ability to not have to pay it back. If the loan isn't payed then the bank looses money. And if you don't pay the money then the interest isn't payed, and surprisingly enough, banks have to make a profit off of that interest. If the banks aren't payed back and the they make no money then they fail. If your bank fails you lose your money. Banks are what fund the economy. If they fail, we fail. Thats what causes the Stocks to go down, everything.
Its been a big argument since the beginning of politics in America about how much power should the federal government have. Andrew Jackson felt that a federal bank was not the way to go and abolished it. Thus came the panic of 1819. If you look at the circumstances of previous panics in our history, you'll notice an eerie similarity.
But alas we pulled out of those and seemed to have something like them every 20 years or so. Hopefully President-Elect Obama will be able to fulfill his promises come January 20'th.