Stocks fell sharply for the week after a sluggish day of trading marked by thin volume. The showing was the worst week for the markets since July 2.
Trading on Friday was quiet, with the market moving in and out of negative territory, although ending solidly lower. Mixed reports on the economy did little to improve the mood of investors, and retail earnings releases largely disappointed market participants.
The Dow Jones Industrials Average ended down 16.8 points, or 0.2 percent, to close at 10,303.15, after three consecutive sessions of losses.
Bank of America , Travelers and Hewlett-Packard led advancers, while Walt Disney and DuPont led decliners.
TheS&P 500 fell 4.3 poijnts, or 0.4 percent, to 1,079.27. The Nasdaq suffered the biggest loss, falling 16.8 points, or 0.77 percent, to 2,173.48. The CBOE Volatility Index, widely considered the best gauge of fear in the market, rose above 26.
Consumerdiscretionary, technology and health care were the worst performing sectors in the S&P while utilities ended higher.
The week's losses were triggered by a gloomier assessment of the economy by the Federal Reserve earlier this week and little indication from economic data, including jobless claims and retail sales, that the economic picture was changing much. Investors also worried about how weakeness in Europe would affect the global economy, as the euro lost nearly 4 percent against the dollar.
All major indexes are negative for the year, with the Nasdaq down 4.22 percent, the S&P down 3.2 percent and the Dow slipping 1.2 percent. Verizon gave some support to both the Dow and the S&P this week, rising more than 1.5 percent, while HP had the worst impact, falling more than 12.5 percent.
Cisco, which reported a weak outlook this week, dragged down the S&P and Nasdaq more than any other stock this week, falling 11.25 percent, while Nvidia continues to be the worst performer on both indexes for the year, down nearly 50 percent, despite a more than 4 percent rise Friday after reporting earnings.
"It really seems simply like the market is taking a break here," said Ryan Detrick, senior technical strategist at Schaeffer's Investment Research, referring to the market's large losses over the past three days.
With earnings releases on the wane, and little economic news on the horizon, Detrick said the market has entered the "dog days of summer" and is unlikley to see much action until after Labor Day.
Volume has been "extremely" low, he said.
On Friday, about 870 million shares changed hands on the New York Stock Exchange, with decliners leading advancers 8 to 7.
In the day's economic news, U.S. retail sales rose in July but the gains were mostly in auto and gasoline station sales, providing little reason to think the retail picture had changed much. The Commerce Department reported sales rose 0.4 percent last month after a revised 0.3 percent drop in June, and not as strong as the 0.5 percent gain expected by economists surveyed by Reuters.
The Consumer Price Index rose 0.3 percent, in line with forecasts. Core CPI, excluding the volatile food and energy sectors, was up 0.1 percent, also as expected.
Also, consumer sentiment edged higher in August to 69.6 from 67.8 in July, data from Thomson Reuters/University of Michigan's Surveys of Consumers showed. The reading was above the median forecast of 69.3 by economists.
Retailers were largely hit hard Friday: J.C. Penney reported better-than-expected earnings, but shares fell after the retailer downgraded its forecast. Meanwhile, Nordstrom was down sharply on worries about the department store's inventory levels, despite the firm's strong earnings report Thursday afternoon.
Kohl's shares fell a day after the retailer reported a weaker-than-expected outlookfor the second half of the year, and S&P Equity cut the company's price target to $58 from $62.
Macy's , which reported strong earnings and a robust forecast earlier this week, also ended lower.
In the technology arena, videogame makers Electronic Arts and Activision Blizzard were relatively flat after industry watcher NPD reported game sales falling 1 percent in July, which actually represents an improvement over prior trends.
Both Oracle and Google were lower after Oracle's patent infringement complaintover Google's Android software for mobile phones.
In addition, India may shut down Google's messaging servicesover security concerns, the Financial Times reported.
Meanwhile, Dell was accused of withholding documents, including e-mails, in a lawsuit over faulty computers it sold to businesses, according to a federal court filing.
And computer software and services provider Autodesk and chipmaker Nvidia were both higher a day after reporting strong earnings.
In acquisition news, IBM said it will pay about $480 million in cash to buy marketing software firm Unicafor approximately $21 per share, a premium of around 120 percent from Thursday's close of $9.55. Unica shares soared more than 100 percent. The move will allow IBM to do more with software and services.
Also, shares of Dynergy jumped more than 50 percent after Blackstone Group said they will buy the power producerfor $543 million in cash and sell four of its power plants to NRG Energy . Blackstone will pay Dynegy shareholders $4.50 in cash per share, a 62 percent premium over Thursday's closing price. Blackstone will also take on more than $4 billion in Dynegy debt.
BP sharesrose after the oil firm announced it has completed a pressure test on its blown-out well and those results are under review by government scientists and the company.
In other economic news, Kansas City Federal Reserve President Thomas Hoenig said that the Fed should set a date for raising the target interestrate to 1 percent.
Speaking in Lincoln, Nebraska, Hoenig said the Fed needs to move beyond the zero rate, "slowly and deliberately." The Fed official has dissented with the majority of the board every meeting this year.
More Fed presidents are scheduled to speak next week including Narayana Kocherlakota of Minneapolis, James Bullard of St. Louis and Charles Evans of Chicago.
Investors also will be paying attention to housing data to be released next week, including housing starts and mortgage applications. Also, the Treasury Department will be hosting a public forum on reforming Fannie Mae and Freddie Mac.
Nymex crude for September delivery fell 6.6 percent this weekto $75.39, the biggest weekly decline since the week ended June 26.
On Tap Next Week:
MONDAY: Credit card default rates, Empire State manufacturing survey, Treasury international capital data, NAHB housing market index; earnings before the bell from Lowe's
TUESDAY: Producer Price Index, Housing starts, industrial production; earnings before the bell from Home Depot, Wal-Mart, Abercrombie & Fitch and TJX
WEDNESDAY: MBA mortgage applications, weekly oil inventories; earnings before the bell from Deere and Target
THURSDAY: Jobless claims, leading indicators, Philadelphia Fed survey; earnings after the bell from HP, Dell, Gap and Intuit
FRIDAY: No major events scheduled
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