NEW YORK, June 22 (Xinhua) -- U.S. stocks declined sharply Friday on subprime problems despite the private equity firm Blackstone's landmark initial public offering (IPO).

The markets were focused on Blackstone Friday, which raised 4.1billion dollars at a price of 31 dollar a unit, the biggest U.S. IPO in five years. Shares of Blackstone opened at 36.45 dollars and ended higher 13.1 percent to 35.06 dollars.

However, fears about subprime market dragged down the markets, as investors saw trouble at two Bear Stearns hedge funds may signal worse problems lie ahead for credit markets.

Bear Stearns shares fell 1.4 percent while other banks with large mortgage exposure also declined.

The Dow Jones industrial average was down 175.67 points, or 1.3percent, at 13,370.17. The Standard & Poor's 500 Index was down 19.32 points, or 1.27 percent, at 1,502.87 while the Nasdaq Composite Index was down 28.00 points, or 1.07 percent, at 2,588.96.