Stocks slumped across the board Friday, as uncertainty over the passage of a Greek austerity plan in addition to worries over Italian banks overshadowed a better-than-expected durable goods report.
The Dow Jones Industrial Average tumbled, led by Cisco and GE , after finishing lower, but off its lows following the Greece deal newsin the previous session.
The S&P 500 slipped closer to its 200-day moving average of 1,263. The tech-heavy Nasdaq also fell. The CBOE Volatility Index, widely considered the best gauge of fear in the market, jumped above 20.
Among key S&P sectors, techs, banks and industrials were the biggest laggards, while utilities gained.
"We're tumbling because the market is very jittery about the passing of the Greek austerity vote," said Boris Schlossberg of GFT Forex.
The euro fell to a session low against the dollaras investors shed the currency ahead of the weekend amid concerns Greece's Parliament may not pass austerity measures needed for the debt-ridden country.
Five-year credit default swaps (CDS) on Greek government debt increased 50 basis points to near 2,330.
On Thursday, Greece won consent from a team of EU-IMF inspectorsfor a five-year austerity plan after committing to an additional round of tax rises and spending cuts. The Greek Parliament is expected to vote on the austerity plan next week.
Italian banks UniCredit and Intesa Sanpaolofell sharply and were briefly haltedfor hitting the daily downward limit amid pressure from Europe's debt crisis. The news comes after Moody's warned of a downgrade on Italian banks last week.
Meanwhile, European banks Barclays and DeutscheBank were trading lower.
Among earnings, Oracle slipped as analysts worried over a slowdown in tech spending, even after the business-software maker posted higher than expected results. Meanwhile, Canaccord raised its price target on the firm to $38.
Micron plunged to lead the S&P laggards after the chipmaker posted quarterly results below Wall Street expectations and warned of low visibility in a weak consumer PC market. In addition, at least six brokerages cut their price targets on the firm. Rivals Nvidia and Taiwan Semi were also lower.
Meanwhile, Accenture gained after the tech outsourcing firm posted a profit that beat estimates and raised its earnings forecast.
Williams made an unsolicited $4.9 billion cash bidfor Southern Union after-the-bell Thursday topping the pipeline company's $4.1 billion stock deal with rival Energy Transfer Equity .
Comcast climbed after Goldman Sachs added the parent company of CNBC to its "conviction buy" list.
Oil prices were mixedwith U.S. light, sweet crude near $91 a barrel, while London Brent crude traded below $107. Oil tumbled after the IEA announced the release of 60 million barrels of government-held stocks over the next 30 days.
IEA Executive Director Nobuo Tanaka told CNBC that the agency is ready to release more oil and that it sometimes "had to bite."
Airlines gave back the previous session's gains with Delta and United Continental sliding more than 7 percent each. United Continental warned about second-quarter revenues and UBS cut its price on the airline giant to $36 from $39.
The Russell indexes are scheduled to rebalance, which is expected to increase trading volume near the end of the session. Russell rebalancing happens typically on the last Friday of June every year.
On the economic front, durable goods rose more than expected in May as bookings for transportation equipment rebounded strongly.
Meanwhile, GDP was revised modestly higher to 1.9 percent in the first quarter, according to the Commerce Department, up from the previously estimated 1.8 percent, in line with expectations.
“This is very much like last year when we had the slow patch,” according to Scott Brown, Chief Economist at Raymond James, adding that the economy will avoid going through a doubled-dip, but growth is still likely to be very slow.
In the second half of the year, Brown expects gasoline prices to pare back and bank lending to increase to small businesses, which will be favorable for consumers.
European shares closed lower for the eight week amid uncertainties over Greece's debt crisis and after shares in two Italian bank shares fell sharply.
Coming Up Next Week:
MONDAY: Personal income & spending, Fed's Kocherlakota speaks, Fed's Hoenig speaks, 2-yr note auction; Earnings from Nike
TUESDAY: S&P Case-Shiller home price index, consumer confidence, 5-yr note auction, IMF board to select new chief
WEDNESDAY: Weekly mortgage apps, pending home sales index, oil inventories, 7-yr note auction, farm prices, Dell analyst meeting, Fed meeting on card fees; Earnings from Family Dollar, General Mills, KB Home, Monsanto
THURSDAY: Weekly jobless claims, Fed's Bullard speaks, Chicago PMI, End of QE2, Marathon Oil split takes place
FRIDAY: Consumer sentiment, ISM mfg index, construction spending, Biden's deadline for deficit plan, HP launches TouchPad, auto sales
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