Intel Corp. led technology companies lower for the fourth straight week after the world's biggest chipmaker forecast sales that trailed estimates. Citigroup Inc., the largest U.S. bank by assets, plunged to the lowest since February 1999 after reporting the biggest loss in its 196-year history.
Home construction fell 14 percent in December, concluding the worst year for the industry since 1980, the Commerce Department said. Separate government reports showing retail sales fell for the first time since June and manufacturing in the Philadelphia region slid to a six-year low heightened concern that the housing slowdown is infecting the broader economy.
The Standard & Poor's 500 Index declined 5.4 percent this week to 1,325.19, the lowest level since September 2006. The benchmark for U.S. equities has tumbled 9.8 percent this year, its worst-ever start.
The Dow Jones Industrial Average dropped 4 percent to 12,099.30, extending its 2008 slump to 8.8 percent. The Nasdaq Composite Index lost 4.1 percent to 2,340.02. The Russell 2000 Index, whose members have a median market value that's 96 percent lower than the S&P 500's, dropped 4.5 percent to 673.18. The small-company index's 21 percent retreat from a July record puts it in a bear market for the first time since 2002.
President George W. Bush's proposed economic stimulus package of as much as $150 billion and Federal Reserve Chairman Ben S. Bernanke's assurance that the central bank is ready to take ``substantive additional action'' on interest rates failed to allay investors' concern that a weakening economy will reduce corporate earnings.
The Chicago Board Options Exchange Volatility Index, or VIX, rose 15 percent this week to 27.18. The benchmark for U.S. options prices, which tends to increase when stocks fall, has surged 151 percent over the past year.
Financial shares in the S&P 500 fell 7.8 percent as a group, the most since July 2002, to the lowest level since 2003.
More than 100 companies in the S&P 500 will report earnings next week, including Apple Inc., Bank of America Corp. and Pfizer Inc. Analysts estimate that fourth-quarter profit for index members as a group fell 17 percent, according to Bloomberg data. That would be the biggest quarterly drop since 2001.