Stocks finished near session lows Friday, breaking a three-day winning streak, sparked by fresh fears over the euro zone sovereign debt crisis and after a batch of mixed earnings reports.
The Dow and Nasdaq slid back into negative territory for the month, but all three major averages still posted modest gains for the week.
The Dow Jones Industrial Average tumbled 120.79 points, or 0.93 percent, to close at 12,822.57, led by H-P and BofA .
The S&P 500 fell 13.85 points, or 1.01 percent, to end at 1,362.66. The Nasdaq dropped 40.60 points, or 1.37 percent, to finish at 2,925.30.
The CBOE Volatility Index, widely considered the best gauge of fear in the market, ended above 16.
For the week, the Dow gained 0.36 percent, the S&P 500 rose 0.43 percent, and the Nasdaq added 0.58 percent. Pfizer was the best performer on the-chip index for the week, while BofA led the laggards.
Stocks had rallied for most of the week thanks to gains in techs, and after Federal Reserve Chairman Ben Bernanke said the central bank stands ready to act if needed.
“You have to wonder why we were up in the first place,” said Joe Saluzzi, co-manager of trading at Themis Trading of the recent rally. “European problems haven’t gone away, volume’s been light, earnings haven’t been that great—I think the rally was overblown.”
The ongoing sovereign debt woes in Europe took center stage once again as euro zone finance ministers agreed to lend up to 100 billion euros to Spain so it can recapitalize its banks. Ten-year Spanish bond yields hit euro-era highs amid worries that the country will eventually run out of funds and need a sovereign bailout.
European shares closed sharply lower, while the euro plungedto a two-year low against a basket of major currencies. (Read More: Euro vs. Dollar—Which Is Ugliest?)
“This seems to be a little bit of a pullback,” said Gordon Charlop, managing director at Rosenblatt Securities. “[But] investors are looking at each stock story differently, so we’re not seeing behavior based on macro-events and that kind of behavior is overall a benefit to the market right now.”