Following a poor retail sales report earlier in the week, a weaker-than-expected Reuters/University of Michigan Surveys of Consumers for early January hurt shares as consumer unease grew about incomes and unemployment.
The first round of major quarterly earnings reports this week has been mixed, leaving investors uncertain about whether stocks can build on strong gains since March 2009. The Dow and S&P 500 hit their highest levels in more than 15 months on Thursday.
JPMorgan , the first major bank to report quarterly results, announced heavy losses on mortgage and credit card loans, sending its shares down 2.3 percent to $43.68.
Because JPMorgan is a bellwether and a very well-managed company, it definitely makes me pessimistic about the upcoming results from the sector, said Alan Lancz, president at Alan B. Lancz & Associates in Toledo, Ohio.
Other large banks also fell, including Bank of America Corp , down 3.3 percent to $16.26 and Wells Fargo & Co , off 3.1 percent to $20.08.
The Dow Jones industrial average <.DJI> dropped 100.90 points, or 0.94 percent, to 10,609.65. The Standard & Poor's 500 Index <.SPX> fell 12.43 points, or 1.08 percent, to 1,136.03. The Nasdaq Composite Index <.IXIC> lost 28.75 points, or 1.24 percent, to 2,287.99.
For the week, the Dow ended down 0.1 percent, the S&P fell 0.8 percent and the Nasdaq fell 1.3 percent.
Intel Corp , a Dow component and the world's largest chipmaker, late Thursday posted fourth-quarter results that beat Wall Street forecasts.
Intel shares fell 3.2 percent to $20.80 on Friday on what analysts said was profit-taking while a semiconductor index <.SOXX> tumbled 3.4 percent.
Other data on Friday showed U.S. consumer prices rose modestly while industrial output rose, suggesting the economy was growing but not generating enough inflation to trouble the Federal Reserve.
The CBOE Volatility Index <.VIX>, which can forecast risk, rose by nearly 7 percent at one point as expiration of January options approached. An analyst said the expiration had a downward influence on prices.
On the New York Stock Exchange 1.41 billion shares changed hands, below last year's estimated daily average of 2.18 billion. On the Nasdaq, about 2.63 billion shares traded, above last year's daily average of 1.63 billion.
Declining stocks outnumbered advancing ones on the NYSE by a ratio of about 11 to 5, while on the Nasdaq nearly 7 stocks fell for every 5 that rose.
(Additional reporting by Ryan Vlastelica; Editing by Kenneth Barry)