U.S. stocks dropped on Friday on jitters that an economic recovery and corporate profits will be anemic, underscored by a Chevron warning about second-quarter results and a tumble in oil futures.

Adding to the market malaise, new data showed consumer sentiment dropped in July to its lowest level since March.

Stocks have also been pressured by declines in oil prices this week, underscoring worries that an economic recovery will be weaker than originally hoped.

The risk we have is that the strength the market was looking for is not going to show up this quarter, at least not to the extent they were hoping, said Terry Morris, senior vice president and senior equity manager for National Penn Investors Trust Co in Reading, Pennsylvania.

The Dow Jones industrial average <.DJI> fell 76.56 points, or 0.94 percent, to 8,106.61. The Standard & Poor's 500 Index <.SPX> fell 8.45 points, or 0.96 percent, to 874.23. The Nasdaq Composite Index <.IXIC> was down 10.94 points, or 0.62 percent, at 1,741.61.

Oil futures fell 1.5 percent to below $59 a barrel, and energy shares were the S&P 500's biggest losers.

Chevron Corp warned that second-quarter earnings would be hit by a sharp decline in U.S. refining margins and that any benefits from higher oil prices would be largely offset by a weaker dollar. Chevron lost 3.3 percent to $60.98.

Declines in technology shares were limited after Goldman Sachs upgraded both the software and hardware sectors to attractive.

Among a round of ratings changes, Goldman raised Apple Inc's price target, boosting the iPod maker by 1 percent to $137.73.

A Thomas Weisel analyst said Cisco Systems Inc is in the process of cutting between 1,500 and 2,000 jobs. Cisco was not immediately available for comment. The stock fell 0.3 percent at $18.11.

On the downside, Goldman cut International Business Machines Corp to neutral from buy, and its shares fell 2.2 percent at $99.88, making it among the Dow's biggest drags.

The S&P 500 and Dow were on track for their fourth straight week of declines.

(Reporting by Leah Schnurr; editing by Jeffrey Benkoe)

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