Friday's drop extended the longest weekly losing streak for stocks since the fall of 2002.
Weak economic news has dampened hopes for a steady recovery, sending stocks down. Traders worry that weaker hiring, sluggish industrial output and a moribund housing market are reversing a bull market that has lifted the Dow 20 percent over the past year.
If the indexes continue their slide for another week, it would be the first time in 10 years that the market suffered a seven-week stretch of losses. The last such stretch began in May 2001 as the dot-com bubble deflated.
The Dow fell 172.45 points, or 1.4 percent, to close Friday at 11,951.91. The S&P 500 index fell 18.02, or 1.4 percent, to 1,270.98. The Nasdaq dropped 41.14, or 1.5 percent, to 2,643.73.
The Nasdaq is now down slightly for the year, as is the Russell 2000 index of small company stocks. The Dow is still up 3.2 percent for 2011 and the S&P 1.1 percent.
Some investors said the recent pullback might not last.
Jack Ablin, the chief investment officer at Harris Private Bank, said strong corporate earnings and widespread economic growth, however slow, should lead to more gains in the coming months.
"Anyone selling shares today has to be pricing in a recession," he said. Most economists expect slow growth but not a recession.
Shares had bounced back Thursday, breaking six consecutive days of losses, after U.S. exports unexpectedly hit a record in April. By Friday morning, those gains had evaporated. The losses were widespread, with declines across all 10 of the S&P 500's industry groups.
Ablin suggested that Friday's losses were partially driven by the Federal Reserve's unloading of millions in risky mortgage bonds onto the market. As big banks buy those securities, they dump assets such as stocks and high-yield corporate bonds.