Benchmark indexes extended declines after Standard & Poor's said it may cut credit ratings on General Motors Corp. and Ford Motor Co. because of higher fuel prices, sending GM to its lowest level since 1982. SanDisk Corp. posted its worst drop in eight months on Citigroup Inc.'s prediction that earnings will be less than estimated because of lower overseas demand. Citigroup led financial shares to a five-year low as UBS AG said the biggest U.S. bank may post a second-quarter loss.
Shares in Europe and Asia also tumbled, sending the MSCI Emerging Markets Index down for a third day, as Iran's threat to retaliate against a potential attack by Israel also weighed on shares. The declines pushed the S&P 500 Index to its third- straight weekly retreat.
The S&P 500 lost 24.28, or 1.8 percent, to 1,318.55 at 3:39 p.m. in New York. The Dow Jones Industrial Average dropped 206.81, or 1.7 percent, to 11,856.28. The Nasdaq Composite Index slid 58.76, or 2.4 percent, to 2,403.3. Eight stocks fell for each that rose on the New York Stock Exchange.
The S&P 500 has lost 3.1 percent this week, extending its 2008 slump to 10 percent. Financial shares have led the market's retreat this year, dropping 24 percent, as credit-related losses approach $400 billion globally. The Dow declined 3.7 percent this week, and the Nasdaq retreated 2.2 percent.
About 460 million shares changed hands on the NYSE in the first 10 minutes of trading, seven times the level seen at the same time last week, as today's expiration of futures and options on indexes and individual stocks spurred trading. So-called quadruple witching occurs once every three months.
The quarterly rebalancing of the S&P 500 after the close of exchanges also boosted volume as investors whose funds mimic the index buy and sell shares to reflect expected adjustments.