The FTSE in London finished down 1.09% and the DAX in Germany settled down 1.9%

"The passing of the EU bail-out for Spain today would have been expected to have seen a positive reaction, but the opposite is true," commented Richard Gilhooly, U.S. director of interest-rate strategy at TD Securities.

"No shortage of action coming out of Spain on Friday and it is souring the overall tone," said Andrew Wilkinson, chief economic strategist at Miller Tabak.

Brad Sorensen, market and sector research director at Charles Schwab, wasn't surprised by Friday's weakness.

"We were probably due for a little pullback after three decent days on the market, decent uptrend over the past month or so, and so a little pullback isn't all that surprising," he explained. "We continue to expect this narrow general trading range over the next month or so until we get Europe kind of back in to action, coming back from vacation, and people get back into the game after the summer plans. ... We think this grinding sideways, muted action will likely be the story of the day for the next month or so."

September crude oil futures lost $1.14 to settle at $91.83 a barrel, snapping a seven-session winning streak. August gold futures settled up $2.40 at $1,582.80 an ounce amid some fresh safe haven buying.

Safe haven seekers were also pushing the benchmark 10-year Treasury up 15/32, diluting the yield to 1.460%. The greenback was rising by 0.68%, according to the dollar index.

The tech sector was one of the market's weak spots despite a raft of exciting IPOs.

Palo Alto Networks ( PANW) shares soared in their debut Friday, as investors clamored for a piece of the networking security specialist.

Palo Alto Networks priced its IPO at $42 a share Thursday night. That was above the expected range of $38 to $40 a share, which had been raised earlier in the week as investors sought to get a piece of the fast-growing technology company.

Palto Alto shares, which trade under the ticker "PANW," opened trading on the New York Stock Exchange at $55.10 per share, a gain of 31.2% over the IPO price. The stock closed at $53.13, up 26.5%.

Shares of online travel company Kayak Software ( KYAK) also surged on their first day of trading Friday, finishing with a 27% gain at $33.18 after pricing its offering above the proposed range as well.

Five Below ( FIVE) shares were able to rise another 3% to close at $27.27 after the specialty retailer's shares surged 55% during their debut on Thursday.

Google ( GOOG) reported second-quarter non-GAAP earnings of $3.35 billion, or $10.12 a share, on revenue excluding traffic acquisition costs of $8.36 billion. Analysts were looking for a profit of $10.04 a share from the Internet search giant on revenue of $8.41 billion. Shares advanced 3%.

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