The Nasdaq Composite that includes large-cap technology names like Alphabet, Microsoft and Facebook led another broad rout on Wall Street Friday, closing at its lowest level since October 2014.
Many stocks that had led on the way up in 2015 led the way down this week. Recent earnings and economic reports, including a tepid jobs report, seemed to confirm investors' fear that the economy, and corporate spending, are slowing.
Dismal sales forecasts from marquee technology names sent some high-profile shares crashing as investors questioned whether information-technology managers would keep spending on their products. LinkedIn Corp LNKD.N dropped 43.6 percent to $108.38 after a weak forecast, and business analytics company Tableau Software (DATA.N) lost almost half its value.
Facebook (FB.O) dropped 5.8 percent to $104.07 while Alphabet (GOOGL.O) fell 3.6 percent to $703.76.
Among consumer discretionary companies, Amazon (AMZN.O) slid 6.4 percent and Netflix (NFLX.O) was down 7.7 percent. Both had more than doubled last year and have been favorites with hedge funds. Friday's action suggests some hedge funds may be taking a harder look at valuations.
"There's a lot of portfolio de-risking going on and high valuation securities are often the first to be sold. It's also the securities that have done extremely well," said Tim Ghriskey, chief investment officer of Solaris Group in Bedford Hills, New York.
"It's a valuation call and it shows concern for the overall market."
The Dow Jones industrial average .DJI fell 211.61 points, or 1.29 percent, to 16,204.97, the S&P 500 .SPX lost 35.4 points, or 1.85 percent, to 1,880.05 and the Nasdaq Composite .IXIC closed down 146.42 points, or 3.25 percent, to 4,363.14.
All three main indexes closed lower for the week, even though the week included one session with a solid rally - as did last week. The Dow fell 1.6 percent this week, the S&P 500 shed 3.1 percent and the Nasdaq fell the most, 5.4 percent.
U.S. stocks are trading above the lows hit during the January rout, but bulls have failed to gain traction, with many rallies evaporating before the close.
The CBOE Volatility Index .VIX, Wall Street's gauge of anxiety, rose 7.1 percent to 23.38, and trading in the index’s options suggests few expect volatility to subside in a hurry.
A softening U.S. economy has many on edge. Friday's January jobs report showed non-farm payrolls increased by 151,000, below the 190,000 expected. But strong wage growth and falling unemployment suggested a March interest rate increase could not be ruled out.
Stocks' close correlation with oil prices continued. U.S. crude settled down 2.6 percent.
About 9.4 billion shares changed hands on U.S. exchanges, matching the daily average for the past 20 trading days, according to Thomson Reuters data.
Declining issues outnumbered advancing ones on the NYSE by 2,330 to 720, for a 3.24-to-1 ratio on the downside; on the Nasdaq, 2,288 issues fell and 509 advanced for a 4.50-to-1 ratio favoring decliners.
The S&P 500 posted 7 new 52-week highs and 26 new lows; the Nasdaq recorded 3 new highs and 195 new lows.
(Additional reporting by Saqib Ahmed in New York; Editing by Nick Zieminski and Dan Grebler)