Wall Street tumbled for the third straight session on Friday, with major averages ending down more than 2 percent, as investors were worried that President Obama's proposals of putting new restrictions on big banks could hurt economic recovery.
The Dow Jones Industrial Average sank 216.9 points, or 2.09 percent, to 10,172.98. It's the Dow's first close below 10,200 since November.
The Standard & Poor's 500 index fell 24.72, or 2.21 percent, to 1,091.76 and the Nasdaq tumbled 60.41, or 2.67 percent, to 2,205. 29.
U.S. stocks suffered their worst three-day decline since March, as bank shares tumbled after President Obama proposed to impose new limits on the size of the nation's biggest banks as well as restrict their risk-taking abilities.
The proposals, to be added to an overhaul of regulations being considered by Congress, would prohibit banks from running proprietary trading operations solely for their own profit and sponsoring hedge funds and private equity funds. Some analysts believe that if the plan is finally approved, big bank's trading profits may be "dramatically" reduced.
All the major banks continued to fall after Thursday's sell- off. Morgan Stanley lost 5.2 percent to 27.80 dollars per share, Bank of America fell 3.7 percent to 14.90 dollars per share and Goldman Sachs declined 4.2 percent to 154.12 dollars per share. The S&P 500 Financials Index has slipped 6.1 percent over the past two days, its biggest decline since September.
Meanwhile, investors were also rattled in recent sessions on concerns of China's tightening monetary policy. The market was worried that any move by China to restrict lending may cool off the country's rapid growth, which in turn could dampen demand for commodities.
Benchmark crude oil settled another 2 percent lower at 74.54 dollars a barrel which marks its lowest closing price in roughly one month. Oil prices fell 4.4 percent this week.
Gold prices closed at 1,089.70 dollars per ounce, down 1.2 percent for the session, but down 2.5 percent for the week.
Market sentiment was severely hammered during the session. Even as most corporate earnings beat average expectations, few of them succeeded in lifting market sentiment because they missed the most optimistic estimates.
Both General Electric and McDonald's exceeded earnings expectations for the latest quarter and showed early strength, but their gains faded into the close.
Broad-based weakness during the past few sessions resulted in the stock market's worst weekly performance since late October and caused stocks to close the week below their 50-day moving average for the first time since early November.