Stocks attempted to rally this afternoon — and the Dow and S&P even briefly broke into positive territory — but the bottom fell out in the final 15 minutes of trading and stocks plunged.
The Dow Jones Industrial Average shed 337.94, or 3.8 percent, to close at 8497.31. The S&P 500 index shed 4.2 percent, and the Nasdaqlost 5 percent.
This comes on the heels of Thursday's rollercoaster session that saw the Dow swing more than 900 points from low to high and drop below 8,000 intraday before ending up 552.59 at 8835.25.
Thursday's gains were no match for the losses racked up during the other four sessions this week. The Dow lost 5 percent for the week, the S&P, 6 percent, and the Nasdaq, nearly 8 percent.
All 10 of the key S&P sectors finished the week lower, led for a second straight week by financials, which shed 12 percent. Telecoms once again were the least negative, falling just 0.6 percent.
One of the most worrisome parts of this week for some analysts is that the crazy volatility has returned to the market. The CBOE volatility index, the best gauge of fear in the market, jumped nearly 18 percent this week to 65.99.
Others, however, say the volatility is a good sign.
“The market is in the throws of pricing in all the bad news that’s coming," Oppenheimer’s Carter Worth told CNBC. "It’s in a process of stabilizing and healing."
A fresh batch of dismal outlooks and layoff news quashed any potential for a continuation of the rally today.
Techs took a hit after Nokiaslashed its fourth-quarter guidance citing the "sharp pullback in global consumer spending." American depositary shares of the Finnish handset maker dropped about 11 percent in heavy trading.
That came just a few days after chip giant Intel slashed its fourth-quarter revenue forecast to around $9 billion, from the previous range of $10.1 billion to $10.9 billion.
Sun Microsystems shares rose 1 percent after the server and software maker said it would be laying off up to 6,000 workers, or 18 percent of its global staff, as a slump in the sale of high-end servers has hammered the company.
JCPenney reported this morning that its profit declined as same-store sales dropped 10 percent. The department-store operator also delivered a fourth-quarter forecast that was well off analysts' estimates and said that challenging conditions would persist through 2009. Its shares lost more than 10 percent.
It's no surprise that retailers are seeing double-digit percentage drops in sales but what is a little unsettling is how far off the forecasts werefrom the four retailers that reported last night and this morning — the other three being Nordstrom , Kohl's and Abercrombie & Fitch — compared with analysts' forecasts. There was anywhere from a 30 percent to 50 percent disparity.
On Friday, the Commerce Department reported that retail sales dropped by a record 2.8 percentto a seasonally adjusted $363.7 billion in October, more than the 2 percent economists had expected and the largest decline since the series started in 1992. Excluding autos, retail sales fell 2.2 percent.
Among the day's other economic news, the University of Michigan/Reuters gauge of consumer sentiment unexpectedly rose to 57.9in a mid-November reading. Import prices fell 4.7 percent last month, the biggest one-month drop since 1988, and export prices slipped by a record 1.9 percent.
Crude prices ended the week below $60 a barrel, closing at a nearly two-year low. One industry executive said oil could test $40 a barrelin the near termbut the firm will post a record profit no matter what.
Investors were also closely watching government responses to the financial crisis.
Ahead of the G20 economic summit, President Bush defended the free market system but acknowledged reforms were needed.
Leaders from G20 countries will hold meetings in Washington to discuss the financial crisis.
Meanwhile, Treasury Secretary Henry Paulson defended his decision to shift how the $700 billion will be usedin an exclusive interview with CNBC, and the man he appointed to oversee the distribution of the funds, Neel Kashkari, took a beating on Capitol Hill.
The proposed auto-industry bailout got backing from U.S. Treasury Secretary Henry Paulson on Thursday as he urged Congress to help the likes of General Motors, Ford and Chrysler. But the money should not come from government's $700 billion bailout fund, Paulson said.
GM shares gained about 2 percent, while Ford declined 5.3 percent.
Citigroup shares ended up 0.7 percent following news that the bank may cut up to 35,000 jobs. On Thursday, the stock slumped to its lowest level in 13 years, putting mounting pressure on management. One analyst told CNBC that Citi shares are set for more declines after falling below a "critical and vital" support level.