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Dow Drops 1% for Week; Bank of America Tumbles

Stocks ended the week down 1% as disappointment in earnings and economic news snapped the market's recent winning streak.

The Dow Jones Industrial Average lost 261.41, or 2.5 percent, to close at 10,097.90 Friday after a report showed consumer sentiment dropped to its lowest level in nearly a year and as the latest batch of earnings disappointed.

All 30 components ended lower, led by Bank of America , which dropped a whopping 9 percent.

Though, for the week, Boeing was the biggest drag on the Dow, down 4.3 percent.

Today's decline, coupled with a modest loss Thursday, clipped the Dow's seven-day winning streak, leaving the index down 1 percent for the week.

The Nasdaq finished the week down 0.8 percent. The biggest drag on the Nasdaq 100 was Apple, which lost nearly 4 percent amid worries about a glitch with the iPhone 4.

Apple CEO Steve Jobs held a press conference Friday to address the problem, which causes calls to be dropped. The stock got a quick pop after Jobs said the company will give customers a free caseto help correct the glitch but ended down 0.6 percent.

"We're not feeling right now that we have a giant problem we need to fix," Jobs said.

The glitch hasn't seemed to dampen consumer demand for Apple products but overall, consumers are growing more pessimistic about the economic recovery.

Reuters and the University of Michigan reported their gauge of consumer sentiment dropped to 66.5 in mid-July, the lowest level in 11 months. This was a sharp reversal after index hit its highest level in 2 1/2 years last month.

And consumer prices fell 0.1 percentin June, the third straight monthly decline, amid a decline in energy costs. Excluding volatile food and energy prices, core CPI rose 0.2 percent.

This came after a string of disappointing economic data earlier in the week, including retail sales and manufacturing activity.

Earnings season got off to a solid start this week, with strong reports from Alcoa and Intel but waned as the week went on.

Financials were the week's worst peformers, down nearly 3 percent after disappointing results out of the sector.

Bank of America and Citigroup beat estimates but disappointed nonetheless as revenues were weak.

This came after similar results from JPMorgan earlier this week that beat expectationsbut failed to impress analysts.

Financial-reform legislation won final approvalin the Senate late Thursday, capping a year of back-and-forth since President Obama proposed financial reform in June 2009.

Banks already are creatively turning financial-reform legislation to their advantage — and their customers may pay the price.

“There’s so much flexibility that these companies have in running their business that this bill is not going to run over them,” Dick Bove, an analyst at Rochdale Securities, said on CNBC Friday. “It’s going to run over the consumer, it’s going to run over the American economy, it’s not going to run over these banks.”

“If you’re a restaurant and you can’t charge for the soda, you’re going to charge more for the burger,” said Jamie Dimon, the chairman and chief executive of JPMorgan Chase, after his bank reported a $4.8 billion profit for the second quarter on Thursday. “Over time, it will all be repriced into the business.”

Goldman Sachs shares jumped 0.7 percent after the bank announced it would pay a record $550 million to settle SEC charges related to subprime mortgage collateralized debt obligations.

The settlement is being touted as a win for Goldman as well as the SEC as the company avoided the fraud allegations, admitting only that it omitted certain information that it should have disclosed.

Computer maker Dell said it's nearing its own settlement with the SEC over accounting practices and the actions of founder and CEO Michael Dell. Shares fell more than 2 percent.

GE reported its earnings rose more than 16 percent, snapping a nine-quarter losing streak. But revenue was light. GE is the parent company of CNBC.

BP shares retreated as the company appeared to have stopped the massive oil leak in the Gulf of Mexico after 86 days and about 183 million gallons of oil were released into the Gulf but investors remained worried that the 75-ton cap may not hold. BP is running some critical tests over the next two days to see if it will hold.

Google shares skidded 7 percent after the Internet giant missed earnings expectations for the first time in two years.

Shares of AMDoutperformed the rest of the tech sector, losing just 0.5 percent, after the chip maker beat consensus estimates.

Retail stocks suffered after that disappointing consumer-sentiment report. Home-repair retailers Home Depot and Lowe’s were both down more than 3 percent. Best Buy and Staples were down more than 4 percent.

Wal-Mart’s stock was hit by a Sanford & Bernstein analyst report cutting the retailer’s same-store sales estimate to a decline of 0.5 percent for the second quarter from an increase of 1.5 percent. The analyst also expects Wal-Mart’s profits to fall to 96 cents from 99 cents.

Gilead Sciences lost 8.5 percent after Jefferies slashed its price target on the stock to $38 from $48.

Volume was slightly higher than usual, with 1.5 billion shares changing hands on the New York Stock Exchange. Decliners outpaced advancers, roughly 4 to 1.

Earnings season kicks into high gear next week, with 12 Dow components and 122 S&P 500 components reporting, including Goldman Sachs, Morgan Stanley, Apple, Microsoft, Coke, Pepsi, UPS, McDonalds, Caterpillar, 3M and Ford also report.

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MCD
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Plus, Fed Chairman Ben Bernanke will be testifying before Congress on the economy, EU bank stress-test results will be released and a trio of housing reports are due out.

— Abby Schultz contributed to this article.

On Tap for Next Week:

MONDAY: NAHB Housing Index; earnings from Delta, Halliburton, Hasbro, IBM and Texas Instruments
TUESDAY: Housing starts; earnings from Goldman Sachs, Pepsi, State Street, Apple and yahoo
WEDNESDAY: Weekly mortgage applications; Bernanke testifies before Congress; weekly crude inventories; earnings from Coca-Cola, Morgan Stanley, UTX, Wells Fargo, USBancorp, eBay and Qualcomm
THURSDAY: ECB meeting; weekly jobless claims; Fed's Dudley speaks; existing-home sales; leading indicators; earnings from AT&T, Caterpillar, 3M, Travelers, UPS, BB&T, Fifth Third, KeyCorp, Nokia, PNC Bank, SunTrust, Amazon, American Express, Microsoft and Capital One
FRIDAY: EU bank stress-test results; earnings from Ford, McDonald's

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