NEW YORK – U.S. stocks plunged for a second day Friday, in the worst week for the S&P 500 in nearly five years, as worries about the prospect of a worsening climate for takeover financing persisted, raising fears that the big deals that have buoyed markets could dry up.
A nearly 3 percent rise in oil prices to their second-highest settlement on record added to worries about the economy. Energy company shares, however, led decliners on the S&P 500. Exxon Mobil Corp. dropped 3 percent.
Losses accelerated in the final minutes of trading, taking the Dow industrials down more than 200 points a day after an equities sell-off that wiped out more than $300 billion in the value of the S&P 500.
The Dow Jones industrial average fell 208.10 points, or 1.54 percent, to end at 13,265.47. The Standard & Poor's 500 Index was down 23.71 points, or 1.60 percent, at 1,458.95. The Nasdaq Composite Index was down 37.10 points, or 1.43 percent, at 2,562.24.
For the week, the Dow fell 4.2 percent, the S&P dropped 4.9 percent and the Nasdaq declined 4.7 percent.
The S&P suffered its worst one-week percentage drop since September 2002, while the Dow fell more than 500 points on the week, the biggest weekly point drop since July 2002.
Selling in financial shares also weighed on the market, with shares of Citigroup Inc. (C) among the biggest decliners on the S&P 500. Citigroup was down 1.8 percent at $46.97.
The mood on energy shares soured beginning Thursday when Exxon (XOM) posted a quarterly profit that missed estimates. Shares of Exxon were down $2.64 at $85.59.
Chevron Corp. (CVX) fell 2.6 percent to $85.20 despite reporting a rise in quarterly profit. Analysts said that Chevron and other energy companies have been struggling to boost production. Exxon and BP Plc both posted declines in second-quarter profits, due in part to falling production,
Drug maker stocks also were among the big losers on the day, with shares of Merck & Co. (MRK) down 3.6 percent at $50.12.
Wall Street could be in for a rocky session come Monday if there are further signs that deal-making is slowing. Since the start of the year, Mondays have become known as "merger Mondays."
Stocks on Friday were higher briefly in morning trading.
Before the market's open, the Commerce Department reported that U.S. economic growth rebounded during the second quarter to its strongest pace since the beginning of last year on a surge in business investment, more government spending and a better trade performance.
Also, comments by Treasury Secretary Henry Paulson lent some support. Speaking on CNBC television, Paulson said the economy was moving to a sustainable pace of growth and the risks in the subprime mortgages market were largely contained.
Trading was heavy on the New York Stock Exchange, with about 2.23 billion shares changing hands, above last year's estimated daily average of 1.84 billion, while on Nasdaq, about 2.7 billion shares traded, above last year's daily average of 2.02 billion.
Declining stocks outnumbered advancing ones by a ratio of about 11 to 5 on the NYSE and by 7 to 3 on Nasdaq.