Hot & Cold Sectors
Tracking the major movements across the best & worst performing industry sector indexes.
Dow 30 Stocks
Top Gainers & Losers
Major Indexes & Stocks to Watch

MORE U.S. INDEXES

» More

TOP HEADLINES

» Markets | Economy | Companies

- Greece Pours $22.6 Billion Into Nation's Four Biggest Banks

FEATURED SLIDESHOWS

» More

Strategies For Business Financing
See the various forms of funding, and what entrepreneurs have used to build successful companies.
7 Electric ‘Super Cars’
Take a peek at some of the most luxurious electric cars available on the market.
The World's Best Places to Live
Cities in some of the world's biggest economies, including the U.S., missed the cut. So, which cities made the list?

MOST POPULAR

News

Blog Posts

Videos

SPECIAL REPORTS

» More

- The Facebook IPO
  Get up-to-the-second breaking news on the Facebook IPO, including in-depth coverage, expert analysis, and Facebook’s stock price.

HOT ON FACEBOOK

Goldman, Banks Lead Selloff, VIX Spikes

Published: Friday, 16 Apr 2010 | 12:58 PM ET

Text Size

By: Cindy Perman
CNBC.com

Stocks skidded Friday, snapping a six-day winning streak, after the SEC shocked the market, charging Goldman Sachs with fraud over its handling of subprime mortgages.

The market had already started in a sour mood as the latest batch of earnings were solid but fell short of the market's lofty expectations and consumer sentiment unexpectedly fell.

"The market was going along pretty good. We were a little weak, that's for sure, but we had good news the other day from JPMorgan, great earnings today from Bank of America, and then for this to come out, really put a damper on the whole sector," Alan Valdez, vice president of Hilliard and Lyons, said on CNBC.

Major U.S. Indexes

.DJIA

.NCOMP

.SPX

The Dow tumbled more than 100 points, or 1 percent, letting go of 11,000. The S&P 500 lost nearly 2 percent, falling below 1,200. And the CBOE volatility index, widely considered the best gauge of fear in the market, shot up to nearly 20.

Goldman Sachs shares [GS Loading... () ] dropped more than 10 percent after the SEC charged the firm with fraud over its handling of subprime mortgages.

Goldman, which had been the golden child of Wall Street while other firms around it tarnished, was accused of securities fraud — that it created and sold a mortgage investment that was secretly designed to fail, the New York Times reported.

The news rippled through the whole financial sector: Bank of America, JPMorgan, Morgan Stanley and Citigroup were all down about 4 to 5 percent.

Ripple Effect: Bank Stocks

"This could be a one, two or three-day or could be a three-month process," Steve Grasso of Stuart Frankel said of the selloff. "But I think that you're seeing marquis names really being cut into today to an extreme level. I think the sell side was looking for a reason to lock in profits and we are on a Friday and this is a major headline."

Many traders focused on the short-term impact on the market.

"Everything we're dealing with happened a couple of years ago," said Dave Lutz, managing director of trading for Stifel Nicolaus in Baltimore. "Ultimately, once this noise has washed out, it's going to translate into one heck of a buying opportunity."

The SEC is also examining statements by GE about its debt program that may have been misleading to investors. This came after former Treasury Secretary Henry Paulson said in his book, "On the Brink: Inside the Race to Stop the Collapse of the Global Financial System," that GE Chief Executive Jeff Immelt had told him the company was having difficulty raising funds in its commercial-paper unit. Meanwhile, GE told investors the programs "remain robust."

Bank of America and GE were the biggest percentage decliners on the Dow, despite decent earnings reports from both.

Bank of America [BAC Loading... () ] reported earnings that were three times expectations and it set aside more money to cover bad loans.

General Electric [GE Loading... () ] also topped earnings forecasts, and said it expects earnings to rise through the rest of the year, as its energy and aviation divisions picked up. CEO Jeff Immelt said he saw "encouraging signs" in the economy. But revenue fell short of expectations. (GE is the parent company of CNBC.com.)

FOR INVESTORS

Google [GOOG Loading... () ] shares fell 5 percent after the Internet giant delivered quarterly results that beat by a wide margin but fell short of the sky-high whisper numbers and investors worried about surging costs at the company.

Citigroup [C Loading... () ] pulled back about 3 percent, after soaring more than 25 percent in the past month as investors have increasingly bet on the stock's potential after the government said it plans to start selling its stake in the company.

Some pros said if Citi's stock breaches $5, then investors will start to pile into the stock even more.

A gauge of consumer sentiment fell to 69.5 in early April, the lowest in five months, from 73.6 at the end of march and expectations of a 75 reading. The survey was conducted by Reuters and the University of Michigan.

Earlier, a report showed housing starts soared to their highest level since November 2008 and permits to build new homes scaled a 17- month high.

Consumer staples enjoyed a resurgence with jittery investors. Coke [KO Loading... () ] and Walmart [WMT Loading... () ] were among the Dow gainers.

Investors also scooped up some select tech stocks, including IBM and Cisco.

Meanwhile, back on the earnings front, Advanced Micro Devices [AMD Loading... () ] beat Wall Street estimates but shares fell after the chipmaker said sales likely will be flat to down 5 percent in the second quarter.