The pullback Thursday and Friday wiped out $526.1 billion in shareholder wealth from the stocks in the Standard & Poor's 500 index.
Although the market has often rebounded after a steep drop _ and has done so in recent weeks _ investors appeared unable Friday to set aside their concerns about a weakening housing market and tightening credit.
A Commerce Department report that the U.S. gross domestic product rose at a better-than-expected pace in the second quarter appeared to do little to quell investors' unease Friday. GDP increased at a 3.4 percent annual rate, indicating that the drag from the housing sector lessened. Economists had expected an increase of 3.3 percent.
Although the GDP reading might have reassured investors that the economy was more than holding up even with soaring fuel prices, it could also raise the possibility that the Federal Reserve, ever vigilant about inflation, might put off a rate cut or even raise rates. Higher rates would exacerbate the market's intensifying concerns about credit.
"I think people are really cautious right now. We're seeing the convergence of a whole host of sort of unrelated or only slightly related issues," said Randy Frederick, director of derivatives at Charles Schwab & Co. He contends market volatility will remain as investors sort through issues such as the availability of credit for corporate buyouts, soured subprime mortgages and rising energy prices.
The Dow fell 208.10, or 1.54 percent, to 13,265.47, with nearly 140 points of that loss coming in the final half-hour of trading. For the week, the index fell more than 585 points, or 4.23 percent. The week's point decline was the worst in five years, while the percentage decline was the largest since late March 2003.
The Dow, which had seen back-and-forth sessions before the declines Thursday and Friday, only last week traded above 14,000 for the first time. The Dow's retrenchment leaves it 756 points below its high from last week. That 5.4 percent decline puts it more than halfway toward the technical threshold of a correction, which is 10 percent.
Broader stock indicators also fell Friday. The S&P 500 ended down 23.71, or 1.60 percent, at 1,458.95. For the week, the S&P gave up 4.90 percent. It was the S&P's worst performance, in percentage terms, since the week ended July 19, 2002.
The Nasdaq composite index fell 37.10, or 1.43 percent, to 2,562.24. It was down 4.66 percent for the week, marking the index's worst run since the stock market had a pullback that began Feb. 27.
Small stocks took an especially devastating blow during the week, in part because the global economy is growing faster than that of the United States. Investors often regard profits at larger companies as more likely to hold up amid a U.S. slowdown because much of their business is drawn from overseas.
The Russell 2000 index of small-capitalization stocks fell 13.65, or 1.72 percent, to 777.83. For the week, the index dropped 7.01 percent, the most since September 2001.
Declining issues outnumbered advancers by more than 2 to 1 on the New York Stock Exchange, where consolidated volume came to a heavy 4.82 billion shares compared with a record 5.84 billion shares seen Thursday.
Bonds added to a huge advance logged Thursday as investors clearly sought the relative safety of Treasurys. The yield on the benchmark 10-year Treasury note fell to 4.77 percent from 4.79 percent late Thursday. The dollar was mixed against other major currencies, while gold prices fell.
Light, sweet crude settled up $2.06 at $77.01 per barrel on the New York Mercantile Exchange, just a penny shy of its all-time high.
"I think we're going to have continued sideways movement with 100 point up-and-down days," said Frederick, referring to the Dow's back-and-forth movements.
"The 14,000 level is going to be tough for this market to get back above," Frederick said.
