Stocks sink on worries about Europe

SAN FRANCISCO — U.S. stocks finished lower Friday, with the Dow industrials marking a third-straight session of losses, a day after Moody's Investors Service put ratings of more than a dozen Italian banks on review and Oracle Corp. reported disappointing results.

"The market unravel was probably precipitated by worries about European banks and earnings shortfalls in the tech sector," said Elliot Spar, market strategist at Stifel Nicolaus & Co.

Down for a third day to post a loss of 0.2 percent for the week, the Standard & Poor's 500 index declined 15.05 points, or 1.2 percent, to close at 1,268.45, with energy and technology knocked the hardest among its 10 industry groups.

Also off for a third consecutive session, the Dow Jones industrial average fell 115.42 points, or 1 percent, to end at 11,934.58 — down 0.6 percent for the week. All but three of its 30 components declined, led by Cisco Systems, off 3.5 percent.

The Nasdaq composite index shed 33.86 points, or 1.3 percent, to finish at 2,652.89, with the technology-heavy index scoring a weekly gain of 1.4 percent. That was its first winning week in the past six.

Looking ahead, "we are expecting a stronger dollar and weaker markets — this isn't over," said David Pankiw, partner at Cubic Financial Advisors. "I don't believe the Greece situation, nor the expected (company) earnings reports, will be a positive to the markets."

The U.S. will see the end of the second round of quantitative easing, and Europe is not out of the woods, with the Greece approval not a fix to the overall situation, he said. "Overseas pressures are too much. Investors are very pessimistic."

Late Thursday, Moody's put the long-term debt and deposit ratings of more than a dozen Italian banks and two Italian government-related financial institutions on review for possible downgrade.

"Worries are building again in whether the European Union can contain the debt crisis around Greece, Ireland and Portugal," said Peter Boockvar, equity strategist at Miller Tabak, who noted a rise in Spanish and Italian bond yields. Spain's two-year note yield climbed to its highest since late May, while Italy's two-year note hit its highest level since late in 2008, noted Boockvar.

Spain's 10-year note yield hit its highest level since May 2000, while Italy's 10-year note was just shy of highs not seen since November 2008, Boockvar said.

Oracle's shares closed 4.1 percent lower after the company reported late Thursday that hardware sales were off 6 percent in its fourth quarter. Oracle in March had projected an increase in sales.

Shares of Micron Technology lapsed nearly 15 percent after the maker of computer-memory chips reported third-quarter sales and profit below Wall Street's expectations.

The latest U.S. economic data proved stronger than anticipated, with durable-goods orders up by 1.9 percent in May, as the Commerce Department also revised up its estimate of economic growth to a 1.9 percent rate for the first quarter.

"As has been the case lately, the domestic numbers are playing second fiddle to the events overseas," said Kevin Giddis, fixed-income strategist at Morgan Keegan & Co.