The markets closed mixed as investors continued to worry about the credit crunch. The Dow fell 25 points to 13,207 while Nasdaq added 5 points to 2601.

On the upside

DG FastChannel (Nasdaq: DGIT) will pay $129 million in cash to aquire Level 3 Communications' Vyvx advertising distribution unit.

AAR (NYSE: AIR) reported higher second quarter earnings as revenue rose.

Shares of Leap Wireless International (Nasdaq: LEAP) surged even though there was no news about the company.

On the downside

Macatawa Bank (Nasdaq: MCBC) increased its reserve for loan defaults by $9.5 million.

Shares of IHOP (NYSE: IHOP) tumbled after rival casual dining chain operator Darden Restaurants (NYSE: DRI) reported lower second quarter earnings.

CarMax (NYSE: KMX) blamed higher financing costs for a drop in third quarter earnings and lowered its 2008 earnings outlook.

In the broad market, declining issues outpaced advancers by a margin of more than 5 to 4 on the NYSE while decliners barely edged out advancers by a narrow margin on Nasdaq. The Russell 2000 which tracks small cap stocks added 2 points to 756.