US stocks fell sharply on Friday, extending a two-day slide as a jump in import prices fanned inflation fears and weaker crude oil prices hurt energy stocks such as Exxon Mobil Corp.
Investors pushed almost every major stock market index down more than 1 percent as lower-than-expected earnings from travel Web site Expedia Inc capped a week of disappointing profits and outlooks from technology companies.
Economic data also failed to dispel investors' worries about rising inflation and interest rates, which on Thursday sparked stocks' biggest decline in nearly four months.
The Dow Jones industrial average finished down 119.74 points, or 1.04 percent, at 11,380.99. The Standard & Poor's 500 Index slid 14.68 points, or 1.12 percent, to end at 1,291.24. The Nasdaq Composite Index dropped 28.92 points, or 1.27 percent, to close at 2,243.78.
"The market thinks there are inflationary pressures and stocks are adjusting. Until growth slows, the market is going to worry about this," said Jeff Schappe, chief investment officer at BB&T Asset Management in Raleigh, North Carolina.
After finishing just about 80 points below its all-time closing high on Wednesday, the Dow suffered its worst back-to-back loss in seven months.
For the week, the Dow fell 1.7 percent, while the Nasdaq dropped 4.2 percent and the S&P 500 slipped 2.6 percent.
Before Friday's opening bell, the government said US import prices rose more than expected in April, adding to inflation worries. But amid the gloom over inflation, oil prices retreated after the International Energy Agency said high prices were affecting usage and cut its forecast for growth in demand.
Crude oil for June delivery fell $1.28 to settle at $72.04 per barrel on the New York Mercantile Exchange.
Shares of Exxon Mobil, the world's largest publicly traded oil company, lost 1.9 percent, or $1.22, to close at $62.24 on the New York Stock Exchange. Exxon Mobil ranked as the heaviest weight on the S&P 500. It also was among the biggest contributors to the Dow industrials' decline.
Capping a tough week for technology stocks, shares of Expedia fell 26.2 percent while graphics chip maker Nvidia Corp lost 7.5 percent as analysts suggested the company's shares may be overpriced.
"On a relative strength basis, the Nasdaq has been the weakest group in the market for some time now, and some weak earnings reports from highly visible companies also led to further negative sentiment," said Michael Sheldon, chief market strategist at Spencer Clarke, a New York brokerage.
Expedia's shares were the biggest drag on the Nasdaq, sliding $5.15 to $14.51 a day after the company said first-quarter net income fell 51 percent.
A series of disappointing profit reports and outlooks from tech bellwethers, including computer maker Dell Inc and communications networking company Cisco Systems Inc, drove the Nasdaq down more than 4 percent for the week.
On Friday, Dell slid 2 percent, or 49 cents, to $24.02, while Nvidia lost $2.14 to $26.33.
Google Inc fell 3.3 percent, or $12.87, to $374.13, a day after shareholders of the Web search provider rejected a dissident investor proposal to end a two-tier ownership structure that vests power in its founders.
Investors also rotated out of inflation-sensitive small- cap stocks, and took profits on industrials like Caterpillar Inc and Alcoa Inc, traders said.
The Russell 2000, an index of small company performance, fell 5 percent for the week.
In Friday's session, Caterpillar slid 2.3 percent, or $1.81, to $77.81, and Alcoa lost 3.4 percent, or $1.21, to $34.81. These two stocks exerted the greatest downward pull on the Dow average.
Volume on the NYSE was active, with about 1.85 billion shares changing hands, above last year's daily average of 1.61 billion. On Nasdaq, about 2.33 billion shares traded, above last year's daily average of 1.80 billion shares.
The market's breadth was overwhelmingly negative, with declining stocks outnumbering advancers by a ratio of about 4 to 1 on the NYSE and by about 3 to 1 on Nasdaq.
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