Updated from 3:15 p.m. EDT

U.S. stocks slid into the close Friday, as traders contemplated the previous day's selloff, record-high oil prices and weakening consumer sentiment.

The

Dow Jones Industrial Average

finished down 106.91 points, or 0.9%, at 11,346.51, and the

S&P 500

was off 4.77 points, or 0.4%, to 1278.38. The

Nasdaq

shed 5.74 points, or 0.3%, at 2315.63. Each index lost at least 3% on the week.

Pharma firm

Merck

(MRK) - Get Report

was a bright spot on the Dow, rising 2.2% to end at $36.98 on news that its telcagepant for migraines improved pain and migraine-related symptoms in a phase III study.

The U.S. market got rocked Thursday, in no small part because of a Goldman Sachs downgrade of the domestic investment banks and the firm's negative comments on

Citigroup

(C) - Get Report

and

General Motors

(GM) - Get Report

. Goldman's comments combined with weakness in

Research In Motion

(RIMM)

and

Oracle

(ORCL) - Get Report

worked to create conditions for a steep selloff.

Equities tried to stabilize when the new session arrived, but ultimately couldn't escape more questions about the financials and another climb in crude.

"The markets are puking because the

Federal Reserve

can't be called to help them out. The Federal Reserve is powerless. They have the kryptonite of soaring inflation and the credit crisis," said Richard Yamarone chief economist Argus Research.

Materials and energy stocks were on the rise.

Occidental Petroleum

(OXY) - Get Report

,

Tenaris

(TS) - Get Report

and

Barrick Gold

(ABX)

enjoyed modest gains.

As for oil, it had its highest close ever, up 57 cents at $140.21 a barrel. The

US Oil

(USO) - Get Report

ETF added1.4% to $114.74. Gold closed at $931.30, up $16.20.

In economic data, the University of Michigan's June consumer sentiment index dropped to 56.4 from 59.8 in May, reaching its lowest level in 28 years. The Commerce Department's personal spending number climbed 0.8% from April to May, marking its biggest increase since November 2007. Personal income rose 1.9% for the month, beating analyst predictions of 0.7%.

"Things are not that good, that we can spend at that pace, but things are not that bad as indicated in the consumer confidence. That's a real exaggeration of what's going on out there," said Yamarone. He said that the spending can be explained by the government's stimulus package.

Ahead of the new day, Lehman Brothers said

Merrill Lynch

(MER)

could be facing another $5 billion in writedowns because of its exposure to the bond insurers.

Moody's placed

Morgan Stanley's

(MS) - Get Report

credit rating on watch for a downgrade to A1 from Aa3. Moody's cited as weaknesses Morgan Stanley's exposure to commercial real estate and leveraged loans.

Also, insurance firm

AIG

(AIG) - Get Report

is bracing for as much as $5 billion in losses related to subprime mortgages,

Bloomberg

reported. The stock dropped 1.2% to $27.75.

On the earnings side, homebuilder

KB Home

(KBH) - Get Report

posted a widened second-quarter loss that was worse than Wall Street's expectations.

Following the prior close,

Bank of America

(BAC) - Get Report

announced it would

eliminate

7,500 jobs after merging with mortgage lender

Countrywide Financial

(CFC)

.

Brewer

Anheuser-Busch

(BUD) - Get Report

also announced it would trim as many as 1,290 jobs as a profit-boosting measure. Anheuser had on Thursday rejected an unsolicited bid of $46 billion from InBev.

In tech, telephone company

Ericsson

(ERIC) - Get Report

led the decline, falling 5.4% to close at $10.27 on an announcement that Sony Ericsson, its joint venture with

Sony

(SNE) - Get Report

, has seen decreased demand for its mobile phones.

Credit Suisse also downgraded

Nokia

(NOK) - Get Report

to neutral from outperform, predicting the company would have trouble keeping up in the smartphone space.

RIM shares continued Thursday's selloff, losing 2% to $120.98, and

VMware

(VMW) - Get Report

dropped 13% to close at $51.04.

Management consulting and information technology services provider

Accenture

(ACN) - Get Report

was one of few tech stocks trading in the green. After Thursday's close, the company

announced earnings

that beat expectations. The stock climbed 6.4% to $41.34.

Away from the stock market, Treasury prices were rising. The 10-year note was up 17/32 in price to yield 3.97%, and the 30-year was rose 1-8/32, yielding 4.52%. The dollar was losing ground against the euro, the yen and the British pound.

Overseas, European markets were mixed, while Asia's exchanges slid. London's FTSE was up 0.2%, and Frankfurt's DAX was down 0.6%. Japan's Nikkei and Hong Kong's Hang Seng were both weaker.