Stocks fell on Friday as Hewlett-Packard's weaker outlook and corporate shakeup added to the uncertainty for investors.

Investors have been worried that the United States and the global economy may be headed for another recession. The S&P 500 dropped another 4.5 percent on Thursday, the sixth time in the past two weeks the index has moved 4 percent or more

Hewlett-Packard's shares tumbled nearly 23 percent to a six-year low at $22.76, and were the biggest drag on the Dow, a day after the company said it may spin off its PC business, the biggest in the world, and lowered its outlook.

At mid-afternoon, the stock was down 20.5 percent at $23.43.

IBM shares, down 3 percent at $158.89, also ranked among the Dow's biggest losers.

What I'm seeing right now is a basically a crisis of confidence, more so than an economic crisis or financial crisis necessarily at this stage, said Natalie Trunow, chief investment officer of equities at Calvert Investment Management in Bethesda, Maryland, which manages about $14.8 billion.

I'm still looking at a potential positive surprise in the third or fourth quarter this year, she said, but added that volatility is to be expected, given what's been thrown at the market, including an unprecedented downgrade of the United States' top-tier credit rating.

The Dow Jones industrial average slid 128.13 points, or 1.17 percent, to 10,862.45. The Standard & Poor's 500 Index fell 12.65 points, or 1.11 percent, to 1,128. The Nasdaq Composite Index dropped 27.64 points, or 1.16 percent, to 2,352.79.

The S&P 500 fell below 1,130, a key resistance level during last summer that is becoming strong support. Analysts see the next support at 1,100.

It's been a difficult week and confidence that this is just a soft patch or slowdown is declining every day, so I just think more investors are just concluding it's not a good idea to own stocks over the weekend, said Hugh Johnson, chief investment officer of Hugh Johnson Advisors LLC in Albany, New York.

Google Inc lost 2.1 percent to $494.31 and helped drag on the Nasdaq.

In early trading, the three major U.S. stock indexes swung between positive and negative from the open, reflecting the volatility that has rocked markets in the past weeks.

The CBOE Volatility Index or VIX, Wall Street's favorite barometer of investor anxiety, was up 2.5 percent at 43.73.

The S&P 500 is down 17 percent from its April 29 closing high, well within a correction and edging close to bear market territory. For the year, the S&P is down 10 percent.

Wall Street typically defines a correction as a drop of 10 percent from a recent peak, while a slide of 20 percent from a recent high is a bear market.

(Reporting by Caroline Valetkevitch; Additional reporting by Ashley Lau and Rodrigo Campos; Editing by Jan Paschal)