DOW - 11,000 broken again!

Dow

10,992.13

-303.68

-2.69%

By: JeeYeon Park

CNBC.com Writer

Stocks closed firmly in the red Friday amid fears that Greece may default on its debt and following news that ECB's Juergen Stark will resign.

For the week, the Dow and S&P 500 plunged more than 5 percent each, while the Nasdaq slumped over 4 percent.

The Dow Jones Industrial Average plunged sharply to close around the psychologically-important 11,000 level.

The Dow has posted three-digit moves in 19 of the past 24 trading sessions.


The S&P 500 and the Nasdaq also tumbled.

The CBOE Volatility Index, widely considered the best gauge of fear in the market, surged almost 15 percent to end near 40.

Greece's finance ministry issued at statement dismissing rumors that the debt-ridden nation is planning on defaulting over the weekend.


"Greece's fundamental choice and priority is it fully and entirely implement the Jul. 21 decision, and wholly fulfill its obligations from the agreement between Greece and its partners," according to the statement from Greece's finance minister.

The news came after Germany said it is preparing plans to shield banks should Greece end up defaulting on its debt, according to a Bloomberg report.

“The fear feeds on itself,” Peter Boockvar of Miller Tabak told CNBC. “The end point will come next week or the week after the at the latest where Greece is hoping that they get the next tranche [of aid] because if they don’t, they realize they’ll run out of money.”

Boockvar also noted that while Germany is preparing to shield their banks in the event of a Greek default, “every other European country is going to be doing the same thing.”

“All the money they’re allocating to the EFSF (European Financial Stability Facility) and these bailouts can be better spent by recapitalizing these banks and finally letting Greece go,” said Boockvar. “The only way to cut debt is to cut debt, not pile on more debt.”

Earlier, markets were rattled following news that ECB Executive Board Member Juergen Stark will step down from his post due to conflict over the central bank's controversial bond-buying program, hinting at a deep divide among ECB members on how to solve the region's fiscal problems.

European shares closed firmly in the red, while the euro fell to six-month lows versus the dollar and the yen.

Banks in Europe were trading lower across the board after Goldman Sachs cut the price targets for major European financial institutions, saying they may need to raise capital if governments impose haircuts on their sovereign debt holdings.