NEW YORK – U.S. stocks fell Friday, capping their worst week in more than four years, as a rapidly diminishing appetite for risk fueled the latest leg of a global equities sell-off.
The Dow Jones industrial average dropped 120.24 points, or 0.98 percent, to end at 12,114.10. The Standard & Poor's 500 Index fell 16.00 points, or 1.14 percent, to 1,387.17. The Nasdaq Composite Index slid 36.21 points, or 1.51 percent, to 2,368.00.
With investors on edge about what could be in store for the markets early next week, they opted to buy U.S. Treasuries for their relative safety and drove bond prices higher for their best week in months.
The sell-off began on Tuesday when China's benchmark stock index fell almost 9 percent, its sharpest drop in a decade, and that led to waves of selling on Wall Street and in stock markets around the world. For the three major U.S. stock indexes, this week's plunge wiped out their gains for the year.
Investors' concerns included the strengthening yen and its implications for popular carry trades, in which investors borrow in low-yielding currencies and use the proceeds to invest in markets with higher returns.
Trouble in the subprime mortgage market was another worry, causing investors to dump shares of lenders such as New Century Financial Corp. (NEW), which slid 7.6 percent.
And as concerns about the outlook for economic growth have taken sway, growth-oriented stock plays, including small-cap stocks and technology shares, took most of the beating.
"For the most part, traders don't want to be long anything except for the most secure assets," said Ernie Ankrim, chief investment strategist for Russell Investment Group in Tacoma, Washington.
"We could have another week or two of some increased volatility."
Even though the sell-off pounded the broader market, technology shares fared the worst, pushing the Nasdaq Composite index down 5.9 percent for its worst week in more than 2-1/2 years.
For the week, the Dow fell 4.2 percent, its worst week since March 2003, while the S&P 500 lost 4.4 percent, its worst week since January 2003.
Shares of tech bellwether International Business Machines Corp. (IBM) were the biggest drag on the Dow average, while shares of Exxon Mobil Corp. (XOM) weighed the heaviest on the S&P 500 as oil prices slipped.
IBM shares finished down 1.5 percent, or $1.37, at $90.90 on the New York Stock Exchange. Exxon Mobil shares closed down 1.4 percent, or 98 cents, at $70.01, also on the NYSE.
Citigroup Inc., the largest banking group in the United States, was also among the worst performers in both the Dow and the S&P 500. Citigroup's stock fell 2.2 percent, or $1.11, to close at $49.97 on the NYSE.
An S&P index of financial stocks fell 1.02 percent.
Apple shares fell 1.9 percent, or $1.65, to $85.41, while Google's stock lost 2.1 percent, or $9.55, to $438.68.
Technology stocks were among the stock market's biggest gainers at the start of the year as investors bet on a profit recovery.
But as concerns about the outlook for economic growth have
taken hold, investors have opted to shun growth-oriented sectors like tech and small-cap stocks.
The Russell 2000 index of small-cap stocks finished down 1.97 percent on Friday. For the week, the Russell 2000 index lost 6.2 percent.
Also weighing on shares was a report on consumer sentiment for February that was weaker than expected. A warning about growing U.S. debt from financier Warren Buffett added to the negative tone.
An index of gold producers' stocks dropped 3.3 percent. Gold futures prices tumbled as funds liquidated their positions.
While William Poole, the president of the St. Louis Federal Reserve Bank, dismissed fears that the U.S. economy was heading into recession, he said the probability has risen a little.
Shares of New Century sank 7.6 percent, or $1.20, to $14.65 on the NYSE. The company, one of the largest U.S. subprime mortgage lenders, said last month it expected a fourth-quarter loss, adding that it would restate three quarters of results. Subprime lenders offer mortgages to people whose credit histories are weaker than average or deemed risky for other reasons.
The Japanese yen rose 1 percent versus the dollar to an 11-week high Friday as U.S. stocks extended declines.
U.S. Treasury debt prices extended their gains, sending yields to the session's lows, as government bonds benefited from the latest slide in U.S. stocks.
The benchmark 10-year U.S. Treasury note rose 11/32 in price to 100-30/32, while its yield slipped to 4.51 percent from 4.55 percent late on Thursday. Bond prices move in the opposite direction of their yields.
Volume was fairly heavy on the NYSE, where about 1.82 billion shares changed hands, close to last year's estimated daily average of 1.84 billion. On Nasdaq, about 2.44 billion shares were traded, above last year's daily average of 2.02 billion.
Decliners outnumbered advancers by a ratio of slightly more than 3 to 1 on both the NYSE and the Nasdaq.