Stocks racked up three weeks of losses as investors became concerned about the direction of global growth amid signs of weakness in the U.S. and as Europe struggled with the restructuring of Greek debt.
The Dow Jones Industrial Average fell for the third week in a row, dropping 83.71 points this week, or 0.66 percent, to close at 12,512.04. On Friday, the blue-chip average fell 93.28 or 0.74 percent.
TheS&P 500 also fell for a third week, declining 4.50 points this week, or 0.34 percent, to close at 1,333.27. On Friday, the index lost 10.33 points, or 0.77 percent. The Nasdaq fell two of the last weeks, declining 25.15 points this week, or 0.9 percent, to 2,803.32. On Friday, the Dow fell 19.99 points, or 0.71 percent.
American Express was the best Dow performer for the week, rising 3.44 percent, while Hewlett-Packard was the worst performer on both the Dow and the S&P 500, falling nearly 11 percent. Philip Morris was the best performer on the S&P 500.
The CBOE Volatility Index, widely considered the best gauge of fear in the market, rose 2.11 percent this week to 17.43.
Utilities and staples were the best performing market sectors for the month.
Many market observers expect a rocky patch for stocks in the months ahead. That's because several factors are at work, including the winding down of earnings season and the end of the Federal Reserve's second round of monetary stimulus, known as quantitative easing two (or QE2), in June. At the same time the markets are entering a period of time that tends to be slow for stocks, said Randy Frederick, chief of trading and derivatives at Charles Schwab.
"The odds it will be a bullish, solid equity market through summer seems pretty unlikely to me," Frederick said.
Despite the big point drops in the Dow and other major indexes, and more than 10 percent spike in the VIX on Friday, volatility remains relatively low from a historical perspective, he added.
Friday's drop "might feel uncomfortable," Frederick said. But there have been only eight days this year that the S&P 500 has been down more than 1 percent, and only four of those days it down more than 2 percent. "This is not a volatile market," he said.
Shares of LinkedIn fell slightly in the late afternoon after rising much of the session a day after the professional social networking site surged after its initial public offering.
The offering was credited for lifting the market yesterday, but there was little follow-through.
"There was some excitement definitely yesterday over the LinkedIn IPO, but it didn’t make too much headway," said Paul Brigandi, vice president of trading at Direxion Funds. "That set us up for the sell-off today."
The IPO and dovish comments from the Federal Reserve—indicating the central bank doesn't plan to hike interest rates soon—were among the only positives in the market this week, and neither was enough to stop selling driven by increasing evidence of a slowdown in global growth, Brigandi said.
On Friday, the German Bundesbank said the nation may start to see a slowdown in its economy, which would be a further blow to the European Union as it struggles to contain a debt crisis in peripheral nations. Also, Fitch downgraded Greece's credit ratingto junk-bond status.
A global economic slowdown reduces global demand, which is why commodities sold off on Friday, continuing a trend that began earlier this month.
"The 'risk on' trades that have worked so well the last several months, we’re starting to see that unwind," Brigandi said.
The dollar continued to rise on Friday as the euro sank on the news of a slowing German economy and worries over the ability of the EU to restructure Greek debt.
Oil prices turned higher in largely range-bound trading. U.S. light, sweet crude fell 0.16 percent this week to close at $99.49, after rising 1 percent on Friday. In London, Brentcrude fell 1.27 percent for the week to $112.39, after gaining 0.87 percent on Friday.
Precious metals, however, gained for the week. Gold rose 1.03 percent for the week to $1,508.80 an ounce after rising 1.11 percent on Friday. Silver rose 0.2 percent this week to $35.08 an ounce after gaining 0.44 percent on Friday.
Retailers had a bad week, as the S&P 500 Retail index fell nearly 3 percent. On Friday, Gap plunged after cutting its profit outlook for the year, citing the rising cost of cotton. Aeropostale also sank after sales fell short of expectations. At least five brokerages cut their price targets for the teen retailer, while Stifel Nicolaus cut its rating on the stock to "hold" from "buy."
AnnTaylor Stores also fell despite a 21 percent gain in first-quarter earnings as it reported a drop in margins.
Salesforce soared after beating sales expectations, and after at least five brokerages raised their price targets for the stock. First quarter profit for the cloud computing company sank 97 percent, however.
On the M&A front, Barnes & Noble skyrocketed after news Liberty Media has proposed buying the bookstore chainfor $1.02 billion.
Volume on the consolidated tape of the New York Stock Exchange was 3.5 billion shares, while 1 billion changed hands on the NYSE floor.
In Europe, shares ended loweron worries about the Greek debt crisis.
On Tap Next Week:
MONDAY: Chicago Fed National Activity Index; St. Louis Fed President James Bullard speaks; Wind Power 2011 conference; earnings before-the-bell from Campbell Soup.
TUESDAY: New home sales, Richmond Fed Business Activity Survey, two-year Treasury note auction; Kansas City Fed President Thomas Hoenig speaks; Boeing Investor meeting; FDIC report on Q1 bank earnings.
WEDNESDAY: Mortgage applications, durable goods orders, oil inventories, five-year Treasury note auction; Minneapolis Fed President Narayana Kocherlakota speaks; USDA Food Prices Outlook, BlackRock shareholder meeting, ExxonMobil shareholder meeting, Yahoo investor day; earnings before-the-bell from Costco and Polo Ralph Lauren.
THURSDAY: GDP, USDA Agricultural Trade Outlook, jobless claims, corporate profits, natural gas inventories, seven-year Treasury note auction, money supply; earnings before-the-bell from Sony and Tiffany.
FRIDAY: Personal income and spending, consumer sentiment, and pending home sales.
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