Wall Street slid on Friday, led by bank shares, after Goldman Sachs
Goldman fell to a session low at $155.57, off 15.6 percent, after the U.S. Securities and Exchange Commission alleged it committed fraud in the structuring and marketing of a debt product tied to subprime mortgages, which cost investors more than $1 billion.
Defaults on the mortgages and the unraveling of related derivatives and debt played a big role in the credit crunch that led to a Wall Street meltdown and the worst U.S. recession since the 1930s.
The first reaction is to sell (stocks) as people are trying to understand better what the potential ramifications could be, said Bobby Harrington, managing director at UBS in Boston. The question is will there be more charges and have there been similar issues of questionable disclosure on other products.
The Dow Jones industrial average <.DJI> dropped 134.22 points, or 1.20 percent, to 11,010.35. The Standard & Poor's 500 Index <.SPX> fell 19.64 points, or 1.62 percent, to 1,192.03. The Nasdaq Composite Index <.IXIC> lost 37.50 points, or 1.49 percent, to 2,478.19.
After a rapid rally in recent weeks, Wall Street was down Friday as Google Inc
Results point to an economy where earnings are good, but you're not seeing the type of activity that would suggest there's going to be a momentum-building kind of thing, said Bernie McGinn, president of McGinn Investment Management in Alexandria, Virginia.
Bank of America Corp lost 3.9 percent to $18.73, following the Goldman news and after it reported higher-than-expected earnings but said loan demand remained low.
Goldman was down 11.5 percent at $163.04 on the New York Stock Exchange.
The KBW Bank index <.BKX> dropped 3.5 percent after having fallen more than 5 percent.
Google fell 6.1 percent to $558.82 after the Internet giant posted a 23 percent jump in quarterly revenue, but some investors hoped for even better results.
General Electric Co
On the economic front, the Reuters/University of Michigan survey showed consumer sentiment took a surprising negative turn in early April due to a persistently grim outlook on income and jobs.
(Reporting by Rodrigo Campos; additional reporting by Leah Schnurr; editing by Jeffrey Benkoe)