NEW YORK (CNNMoney.com) -- Stocks slumped Friday on worries that Europe's economic woes could spread to the United States, while the euro fell to 18-month lows versus the dollar and gold hit fresh records.
Investors dumped stocks and fled to safe-haven areas of the market such as the dollar, gold and government debt.
Despite the drop, the three major indexes finished higher for the week, with the Dow rising 2.3%, the S&P up 2.2% and the Nasdaq up 3.6%.
The Dow Jones industrial average (INDU) lost 163 points, or 1.5%. The S&P 500 (SPX) fell 22 points, or 1.9% and the Nasdaq (COMP) composite lost 47 points, or 2%. Markets had seen even bigger losses earlier in the afternoon, but managed to trim a little by the close.
"This is all about the euro," said Dave Rovelli, managing director of U.S. equity trading at Canaccord Adams. "It's fallen out of bed and strengthened the dollar."
Dollar weakness has been good for U.S.-based multinational companies that do a lot of business overseas, and the reversal of that is hitting a lot of these big blue-chip companies, he said.
"If Europe's economy goes back into recession, that's going to hurt our conglomerates," he said.
He cited the examples of Hewlett-Packard (HPQ, Fortune 500), which could see 20% of its business impacted by weakness in Europe, and Cisco Systems (CSCO, Fortune 500), which said Thursday that it had the best quarter ever, but that it was concerned about Europe.
Stocks began the week with strong gains as investors welcomed Europe's nearly $1 trillion dollar bailout package that was aimed at helping Greece, Spain, Portugal, Italy and other struggling nations as well as protecting the euro.
But the markets have been volatile the rest of the week, while Asian and European markets have slipped. The euro has been down all week. Meanwhile, the price of gold hit a record intraday of $1,249.70 Friday before reversing course and sliding.
On the move: Stock declines were broad based, with all 30 Dow stocks falling, led by Boeing (BA, Fortune 500), Caterpillar (CAT, Fortune 500), Chevron (CVX, Fortune 500), Exxon Mobil (XOM, Fortune 500) and IBM (IBM, Fortune 500).
Credit card stocks fell after the Senate proposed a new rule that would limit the amount companies charge consumers using their debit cards. Shares of Visa (V, Fortune 500), MasterCard (MA, Fortune 500) and Capitol One Financial (COF, Fortune 500) all fell.
A variety of financial shares fell, dragging down the KBW Bank (BKX) index by 3.2%.
Market breadth was negative. On the New York Stock Exchange, losers beat winners 7 to 1 on volume of 1.52 billion shares. On the Nasdaq, decliners topped advancers five to one on volume of 2.6 billion.
World markets: Stocks around the globe were mostly lower as worries about the crisis took its toll. In Europe, Britain's FTSE lost 3.1%, Germany's DAX lost 3.1% and France's CAC 40 lost 4.6%.
Asian markets fell, with Japan's Nikkei losing 1.5% and Hong Kong's Hang Seng losing 1.4%.
Dollar and commodities: The dollar gained 1.4% versus the euro and fell 0.3% against the yen. The euro slid to an 18-month low versus the dollar.
U.S. light crude oil for June delivery dropped $2.79 to settle at $71.61 a barrel on the New York Mercantile Exchange.
COMEX gold for June delivery lost $1.40 to settle at $1,227.70 an ounce after touching an intraday record of $1,249.70 earlier.
Bonds: Treasury prices rallied, lowering the yield on the 10-year note to 3.44% from 3.56% late Thursday. Treasury prices and yields move in opposite directions.
Retail sales: April retail sales rose 0.4%, the Commerce Department reported. The figure was double what economists surveyed by Briefing.com were expecting but weaker than the revised 2.1% climb in sales seen in March.
Retail sales excluding autos rose 0.4%, short of the 0.5% economists were expecting. Sales rose 1.2% in March.
Economy: The Federal Reserve said industrial production rose 0.8% in April, in line with expectations and following an increase of 0.2% in March. Capacity utilization rose to 73.7% from 73.1% in March. Economists expected 73.9%.
The University of Michigan's consumer sentiment index rose to 73.3 from 72.2. Economists expected it to rise to 73.5.
|Overnight Avg Rate||Latest||Change||Last Week|
|30 yr fixed||3.80%||3.88%|
|15 yr fixed||3.20%||3.23%|
|30 yr refi||3.82%||3.93%|
|15 yr refi||3.20%||3.23%|
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