U.S. stocks dropped sharply (wiping out this week’s advances) in tandem with plunging commodity prices

The government’s Department of Energy reported that gasoline demand fell by the biggest amount in seven weeks, reflecting consumers’ worries about $4 per gallon prices. Crude oil prices in New York plummeted almost 5 percent to settle below the $100 per barrel level. Gasoline futures plunged 8 percent to $3.11 a gallon.

The Dow Jones industrial average declined 130.22 points, or 1.02 percent, to close at 12,630.03. Nasdaq slipped 26.83 points, or 0.93 percent, to 2845.06. The S&P 500 index dropped 15.08 points, or 1.11 percent, to 1342.08.

The sell-off in oil and gasoline futures particularly hurt stocks in the energy and materials sectors. Shares of oil heavyweights Exxon Mobil (NYSE: XOM) and Chevron (NYSE: CVX) tumbled 2 percent or more.

Other commodities, including precious metals, also suffered deep price losses – gold fell about 0.82 percent, silver and copper each sank more than 3 percent.

The tumble in commodities hammered mining stocks like Freeport McMoRan (NYSE: FCX) and Teck Resources (NYSE: TCK).

“Commodities are getting crushed here, and it's taking the whole market with it, David Rovelli, managing director of U.S. equity trading at Canaccord Adams, told the media.

The euro fell against the dollar as fears about Greece’s ability to repay its debt intensified. However, the dollar fell against the pound sterling and yen,

Among major stocks, Walt Disney (NYSE: DIS) plunged 5.44 percent after the media giant company posted disappointing earnings. Yahoo (Nasdaq: YHOO) did even worse, sinking 7.28 percent after the company raised warnings about its Chinese assets.

On the brighter side, American International Group Inc. (NYSE:AIG) gained 3.48 percent after the US Treasury put the greenlight on a $9-billion stock offering.

Macy's (NYSE: M) surged 7.71 percent after posting strong quarterly profits and doubling its quarterly dividend.

U.S. Treasuries rose a bit, as the yield on the 10-year U.S. Treasury slipped to 3.157 percent.

European stock indices were mixed, France’s CAC-40 index edged up 0.14 percent, while UK’s FTSE-100 index fell 0.71 percent and Germany’s DAX slipped 0.09 percent.

Asian markets also finished mixed. The Shanghai Composite fell 0.3 percent, the Hang Seng in Hong Kong edged 0.2 percent lower, although Japan's Nikkei gained 0.5 percent.