Stocks plunged into the red Friday after blue-ribbon investment bank Goldman Sachs was charged with misleading investors, reports AFP.

News that the Securities and Exchange Commission (SEC) has brought civil fraud charges against the Wall Street giant sent all major US indices plummeting, with financial firms hit the hardest.

The Dow Jones Industrial Average tumbled 125.91 points (1.13 per cent) to 11,018.66 points. The selloff snapped a six-session winning streak that had driven the Dow to a fresh 18-month high.

The tech-rich Nasdaq composite slid 34.43 points (1.37 per cent) to 2,481.26 and the broad-market Standard & Poor's 500 index shed 19.54 points (1.61 per cent) at 1,192.13.

Early trading was mixed, but the SEC announcement, and its refusal to rule out further charges across the financial sector, sent shares in some of Wall Streets biggest firms deep into negative territory.

“The uneasiness is prompting traders to book profits from the recent multi-year highs in the major equity indices,” analysts at Charles Schwab & Co. said.

Goldman Sachs dived 12.79 per cent to 160.70 dollars, after falling as much as 15 per cent in intraday trade.

The company rejected the SEC charges as “completely unfounded in law and fact” and would contest them.

The S&P banking index lost 2.81 per cent, as Morgan Stanley tumbled 5.57 per cent, JPMorgan Chase lost 4.73 per cent, Citigroup dropped 5.20 per cent and Wells Fargo slid 2.83 per cent.

“While selling was the worst among financials, more than 90 per cent of the stocks in the S&P 500 retreated into the red,” analysts said in a client note.
“Most market participants wanted to lock in profits after they had watched the S&P 500 climb nearly four per cent over the course of the previous 10 sessions.”

Trading got off to a subdued start despite larger-than-forecast increases in housing starts and building permits in March, as well as favorable earnings reports from Bank of America and General Electric.

Bank of America, the biggest US bank by assets, plunged 5.49 per cent to 18.41 dollars and GE fell 2.72 per cent to 18.97 dollars.

In the tech space, Internet search giant Google dropped 7.56 per cent to 550.31 dollars and computer chip maker AMD lost 3.44 per cent at 9.81 dollars, despite reporting quarterly results that beat market expectations.

Oracle slipped 0.95 per cent to 25.95 dollars. The business software firm plans to buy Phase Forward, up 28.44 per cent at 16.80 dollars, for 685 million dollars.

Toy maker Mattel, which turned an unexpected profit, edged up 0.38 per cent to 23.84 dollars.

The bond market advanced. The yield of the 10-year Treasury bond fell to 3.770 per cent from 3.887 per cent Thursday and that of the 30-year bond slumped to 4.671 per cent from 4.759 per cent. Bond yields and prices move in opposite directions.