The Dow's decline was led by JPMorgan, Caterpillar and Bank of America . The S&P 500 and Nasdaq were also lower.
Utilities and consumer staples were among the sector leaders, while financials, consumer discretionary and technology sectors were the weakest links.
and Exchange Commission's charge with fraud over a debt instrument it sold to investors.
Most analysts still have a "buy" rating on Goldman but Bank of America/Merrill Lynch downgraded its rating on the stock to "neutral" from "buy" this morning, saying it's hard to see the stock making any progress until the matter is resolved.
“People are trying to make the case that where there’s smoke there’s fire,” said Justin Wiggs, vice president of trading for Stifel Nicolaus in Baltimore. “The Senate wants to have somebody to cruficy for this.”
And, Morgan Stanley was fined $14 million for failing to report a big-block oil trade and UBS Securities was fined $200,000 in the same case. Moore Capital was handed a fine of $25 million for attempting to manipulate palladium and platinum futures.
Meanwhile, most regional banks such as KeyCorp, Fifth Third and Huntington were showing pockets of strength.
Amid the fear, investors turned to the safety of US Treasurys, sending the price of the benchmark 10-year note up half a point and the yield down to 3.67 percent, its lowest level since March 22.
In the day's economic news, the U.S. government said gross domestic product grew 3.2 percent, a shade under forecasts and well below the fourth-quarter growth of 5.6 percent.
The morning also brought some disappointing news on the consumer front: Consumer sentiment fellin late April, according to the latest Thomson Reuters/University of Michigan survey.
In the latest news from Greece, a European Commission spokesman said discussions over a rescue plan are likely to wrap up Saturday. A complete fiscal overhaul is likely for the nation. At the same time, Moody's downgraded its ratings on nine Greek banks.
Worries about Greece subsided somewhat amid expectations that an aid package could be unveiled this weekend.
The dollar fellagainst the euro as expectations that Greece will soon receive emergency aid helped to quiet jitters about how Athens will pay its debts while gold hit a 2010 highabove $1,180 an ounce. Oil prices roseabove $85 a barrel, heading for a third straight monthly gain.
BP remains mired in cleaning up the massive oil spill on the Mississippi River, but investors were looking for bargains in the company's stock price, which has fallen roughly 12 percent since the disaster began. Analysts said the drop represents a buying opportunity.
Transocean , which operates the Gulf oil rig, fell almost 5 percent.
In earnings news, oil giant Chevroneasily beat forecastswith $2.27 a share versus expectations of $1.94, but fell short on revenue.
D.R. Horton shares jumped to lead the S&P 500 after the homebuilder reported a profit and a sharp increase in orders. Results have started to improve across the sector, with Meritage Homes and Ryland Group earlier in the week reporting improved bottom lines.
Other builders like Hovnanian and Beazer were also trading higher.
McAfee shares tumbled more than 10 percent to become one of the S&P 500 laggards after the software maker reported results that missed Wall Street projections.
Chipmakers were mostly lower, with MEMC Electronic Materials sliding almost 20 percent. The wafer manufacturer posted worse-than-expected results and two brokers issued downgrades.
Rival chipmakers Qualcomm, Broadcom and Texas Instruments also fell.
Massey Energyfell almost 10 percent amidst criminal investigation over the death of 29 miners after an explosion at the company's West Virginia coal mine. The FBI is examining possible bribery of officialsat the agency that oversees the mining industry and possible criminal negligence on the part of Massey.
In M&A news, UAL's United Airlines and Continental Airlines are likely to announce a merger Mondaythat would create the world's biggest airline.
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—Reuters contributed to this report.