Stocks slumped with the Dow and S&P on track for their third-straight day of losses 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 Pfizer , 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. Despite the day's loss, the Nasdaq is still on track to break a five-week losing streak. The CBOE Volatility Index, widely considered the best gauge of fear in the market, jumped more than 10 percent to trade above 21.
The Russell indexes are scheduled to rebalanceafter the close. Russell rebalancing happens typically on the last Friday of June every year.
Among key S&P sectors, techs, energy 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. Meanwhile, gold settled near $1,500.90.
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 haltedamid pressure from Europe's debt crisis. The news comes after Moody's warned of a downgrade on Italian banks Thursday.
Meanwhile, European banks RBS, Barclays and DeutscheBank declined sharply.