Wall Street retreated from its 29-month high on Friday as escalating anti-government protests in Egypt prompted investors to move away from equities and into safer assets.
Disappointing results from Amazon and Ford further triggered the selloff. The S&P 500 was on track to close below its 14-day moving average for the first time in two months.
The civil unrest in Egypt caused the stock market's fear gauge to jump nearly 20 percent while boosting prices of safer assets like U.S. Treasury bonds and the greenback.
The market hates uncertainties, especially geopolitical ones and based on how that shapes up throughout the weekend (in Egypt), next week's trading will be impacted, said Thomas A. Nyheim, Vice President and Portfolio Manager, Christiana Trust in Delaware.
The Dow Jones industrial average was down 149.14 points, or 1.24 percent, at 11,840.69. The Standard & Poor's 500 Index fell 19.74 points, or 1.52 percent, at 1,279.80. The Nasdaq Composite Index lost 63.67 points, or 2.31 percent, at 2,691.61.
Nasdaq quotations for its main stock indexes suffered an outage of nearly one hour at the open, also causing confusion among traders. Nasdaq OMX Group has not explained what caused the problem.
The outage certainly did cause some chaos in morning trading, and is partially responsible for the Nasdaq underperforming the wider market, Nyheim said.
Amazon shares slipped 7.9 percent to $169.90, a day after the online retailer recorded revenue below the consensus view.
Ford Motor Co slumped 11.2 percent to $16.67 after a steep drop in quarterly profit. Rival automaker General Motors Co also lost 5.3 percent to $36.63.
Dow component Microsoft Corp also fell 4.1 percent to $27.70 a day after its profit dipped. The Dow's decline threatened to end a streak of eight weeks of gains in the blue-chip index.
The CBOE Volatility Index VIX, which measures the level of investor anxiety, jumped 19.9 percent to 19.35, its largest daily percentage gain since June. In Egypt, President Hosni Mubarak sent troops and armored cars into cities in an attempt to quell street fighting and mass protests, and medical sources said at least five protesters had been killed and 870 wounded. [
In safer assets, gold futures rose more than 2 percent and the U.S. dollar rose 0.6 percent against a basket of major currencies.
Crude futures jumped about 4.4 percent to $89.38 per barrel but energy company shares declined.
Shares of Apache Corp were hit, with the Egypt situation sparking worry the unrest might spread to other Middle Eastern countries where other U.S. oil companies, including Occidental Petroleum Corp, have operations.
Apache shares were down 1.7 percent at $114.36 and Occidental Petroleum fell 2.4 percent to $94.66.
During the Nasdaq outage, traders said there were no quotes for the Nasdaq composite and the Nasdaq 100 indexes. Individual share price quotes were not affected, and trading volume was normal.
Equities garnered support earlier in the session from data showing the U.S. economy grew at a 3.2 percent rate in the fourth quarter as consumer spending accelerated. Excluding inventories sales grew about 7.1 percent, the best since 1984.
(Reporting by Angela Moon, Editing by Chizu Nomiyama)