Investors slammed the door on a six-day winning streak for U.S. stocks with a sell-off on Friday after Goldman Sachs was charged with fraud by U.S. regulators and corporate earnings fell short of heightened expectations.
The financial services giant said the charges were completely unfounded in law and fact.
Financial shares around the world sank on the news, with the KBW banks index <.BKX> down 3.6 percent. Morgan Stanley
Fraud is a huge charge. This could truly cripple Goldman, said Rob Stein, managing partner at Astor Asset Management in Chicago.
Although Stein said he didn't feel this scenario was likely, he added, This certainly proves that financials are not the place to be for the next step in the recovery.
The Dow Jones industrial average <.DJI> was down 95.60 points, or 0.86 percent, at 11,048.97. The Standard & Poor's 500 Index <.SPX> was down 15.48 points, or 1.28 percent, at 1,196.19. The Nasdaq Composite Index <.IXIC> was down 31.36 points, or 1.25 percent, at 2,484.33.
After a rapid rally in recent weeks, Wall Street was down as Google Inc
Bank of America reported higher-than-expected earnings but said loan demand was low, while GE posted weak first-quarter revenue.
BofA fell 4.5 percent to $18.60 and was the top percentage decliner on the Dow. GE, another Dow component, sank 2.9 percent to $18.93.
Google lost 6.3 percent to $556.98 a day after it posted a 23 percent jump in quarterly revenue, but some investors had hoped for even better results.
On the upside, Mattel Inc
The Goldman news also had an impact commodities, with crude oil futures dropping 2.8 percent to $83.15 per barrel.
In economic news, the Thomson Reuters/University of Michigan's Surveys of Consumers showed consumer sentiment took a surprising negative turn in early April due to a grim outlook on income and jobs.
U.S. housing starts rose more than expected in March while permits to build new homes scaled a 17-month high, according to a government report.
(Editing by Kenneth Barry) )