Dow Drops Over 100 as Consumers' Mood Sours

Stocks tumbled Friday after a report showed consumer sentiment dropped to its lowest level in nearly a year.

Stocks had already started lower following earnings from General Electric, Bank of America and Citigroup.

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

The Dow Jones Industrial Average was down more than 100 points after the report.

Financials and consumer-discretionary stocks were among the biggest decliners.

In the morning's other economic news, consumer prices fell 0.1 percentin June, the third straight monthly decline. Excluding volatile food and energy costs, core CPI rose 0.2 percent.

The latest batch of bank earnings came as a bit of a disappointment, despite the fact that several beat analysts' expectations.

Bank of America reported its net income fell 3.1 percent amid light revenue but the results still topped forecasts.

Citigroup reported its earnings fell 37 percent amid lower revenue in investment banking but the bank also beat expectations— even the whisper number.

Goldman Sachs shares jumped over 4 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 a settlement with the SEC over its accounting 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.

European shares managed to make modest gains but weak banking stocks dampened the major indexes. Asian markets closed mixed, but mostly lower, in the wake of the weak close in the U.S.

Apple shares rose ahead of the company's news conference about the iPhone 4, which is set for 1 pm ET. The Internet is all abuzz that a glitch that causes calls to be dropped may force Apple to recall the phone but the Wall Street Journal is reporting that Apple will not announce a recall of the phone.

After the bell Thursday, tech earnings were mixed: Googlemissed expectations, while chip maker AMDbeat consensus estimates.

BP shares retreated as the company 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.

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