Stocks dropped on Friday as slowing consumer spending and write-downs in the financial sector sent the Dow Jones into triple digit losses.
The index was down over 220 points, or 1.7 percent to 12630 in the early afternoon, while other major indices fell over 1 percent.
With earnings expected in coming weeks, investors are increasingly worried about how major banks and brokerages have fared in the most recent quarter after suffering losses related sub-prime mortgages. Merrill Lynch & Co., Citigroup Inc. and JPMorgan Chase & Co and other major firms are expected to post numbers next week.
Merrill, the nations largest brokerage is expected to report losses of $15 billion stemming from sour mortgage investments, the New York Times reported on Friday.
Investors also grew nervous after American Express Corp. warned late Thursday that slower spending and more delinquencies on credit card payments will hamper profit throughout 2008.
The session revealed the extent of investor's woes about the financial sector and its attempts rectify it's troubles. Bank of America Corp. agreed Friday to buy Countrywide Financial Corp. for $4 billion, a deal that rescues the country's largest mortgage lender but pays less than the company's market value.
The move came after the bank had just invested $2 billion into Countrywide last Thursday.
The Standard & Poor's 500 index fell 13.18, or 0.93 percent, to 1,407.15, and the Nasdaq composite index fell 32.98, or 1.33 percent, to 2,455.54.
Stocks have skidded lower in the new year, with the Dow often falling by triple digits in a single session amid anxiety about a possible recession as well as the still-unfolding fallout from the mortgage crisis.
Oil prices came under pressure, with a barrel of light, sweet crude for February falling 70 cents to $93.01 on the New York Mercantile Exchange.
On the New York Mercantile Exchange, gold futures broke over $900 an ounce for the first time, hitting $900.10 before dropping back to $899.00 an ounce, up $5.40, while crude-oil futures dropped 53 cents to $93.19 a barrel.
Separately, there was good news on inflation in December, when import prices were unchanged, the Labor Department said.