updated 7/17/2006 9:37:00 AM ET 2006-07-17T13:37:00

Surging oil prices pulled stocks sharply lower for a third straight session Friday, with bland earnings from General Electric and weak consumer data further dampening the economic outlook. The Dow Jones industrial average has lost 396 points over the last three days.

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“I don’t think you’re going to bring out a lot of buyers in the market after a week like this,” Jay Suskind, head trader at Ryan Beck & Co., said of escalating political turmoil in the Middle East, Iran and North Korea. “Uncertainty over the world situation is just too much for the market to have a solid up day.”

Crude oil futures reached another intraday record as Israel intensified its attacks on Lebanon, raising concerns about potential supply disruptions throughout the Middle East.

Retail sales fell unexpectedly in June , as did consumer confidence for July. Industrial and financial conglomerate GE’s second-quarter earnings matched analyst estimates, but the in-line results troubled investors already concerned that the recent spate of profit warnings was a sign the economy could be headed for a downturn.

The Dow Jones industrial average closed the day down 106.94 points, or 1 percent, having fallen more than 121 points Wednesday and another 167 points Thursday . The index is now just 21 points from turning negative for 2006 and below the psychologically-key 11,000 level.

The broader Standard & Poor’s 500-stock index lost 6.10 points, or 0.5 percent, Friday, while the Nasdaq composite index fell 16.76 points, or 0.8 percent, to a 14-month low.

Wall Street has slogged through a gauntlet of mounting uncertainties in recent weeks, with concerns about a potential slowdown in the global economy now exacerbated by increasing political turmoil throughout the world. The commotion sent investors running for cover, giving stocks their worst week this year.

For the week, the Dow slid 3.2 percent, the Nasdaq plunged 4.4 percent and the S&P 500 index sank 2.3 percent.

Much of the market’s worries stemmed from the trend of rising interest rates worldwide, which is expected to curtail spending and foreign investment and drag on economic growth. Although the recent jump in oil prices have reinforced beliefs that the Federal Reserve will boost rates again at its Aug. 8 meeting, the early wave of downbeat earnings data has spurred fears that the economy is weakening and could buckle beneath higher lending costs.

“I think [second-quarter earnings] will come in slightly above expectations, but that still doesn’t answer the question of whether the economy is slowing and what companies are at risk,” said Steven Goldman, chief market strategist at Weeden & Co., adding that “the nervousness will not change over the next couple of months.”

Bonds steadied after this week’s runup, with the yield on the 10-year Treasury note unchanged at 5.07 percent from late Thursday. The 2-year yield, however, stood at 5.1 percent; the inversion of bond yields signaled expectations for slowing economic growth.

The U.S. dollar gained on the Japanese yen and was flat versus European currencies. Gold prices advanced, climbing to $650 an ounce.

In economic news, the Commerce Department said June retail sales slipped 0.1 percent after growing by the same amount the previous month. Analysts had been predicting a 0.4 percent increase.

The University of Michigan said its consumer-sentiment index for July fell 1.9 points to 83. That compares with expectations for a slight rise to 85.5.

GE said five of its six core businesses saw double-digit earnings growth last quarter ; the sole loser was its NBC Universal broadcast unit. GE, which met Wall Street’s profit and revenue forecasts, nonetheless sank 56 cents $32.11.

EMC Corp. added to Wall Street’s stress over corporate profits after the software maker said earnings slid 5 percent last quarter. EMC, which earlier this week warned of a possible miss, fell 15 cents to $9.83.

Petco Animal Supplies Inc. jumped $8.44 to $27.89 after the company said it has agreed to be taken private for $29 per share, or $1.68 billion.

Moody’s Investors Service pushed Ford Motor Co.’s debt rating further into junk status, saying the shift from sport-utility vehicles to cars was hurting the company’s prospect of recovery. Ford lost 18 cents to $6.38.

Overseas, Japan’s Nikkei stock average plunged 1.67 percent. Britain’s FTSE 100 dropped 1 percent, Germany’s DAX index fell 1.9 percent and France’s CAC-40 lost 1.48 percent.

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