Stocks Set to End Lower Amid Euro Debt Fears

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.

Deutsche Bank cut its second-quarter earnings estimates on Goldman Sachs and Morgan Stanley to $2.10 a share from $2.55 and 38 cents a share from 42 cents, respectively. Shares of both banks slipped.

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 more than 10 percent to lead the S&P laggards after the chipmaker posted results below expectations and warned of low visibility in a weak consumer PC market. In addition, at least eight 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.

Pfizer and Pain Therapeutics declined after the FDA rejected the pharma giants' painkiller Remoxy.

Williams made an unsolicited $4.9 billion cash bidfor Southern Union 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 gained 14 cents to settle at $91.16 a barrel, while London Brent crude settled at $105.12. 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 5 percent each. United Continental warned about second-quarter revenues and UBS cut its price on the airline giant to $36 from $39.

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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