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Stocks tumbled on Friday, with the Dow falling over 300 points for its worst week since November 2011, after big selloffs in European and Asian markets over concerns of slower global economic growth.
As Wall Street's faith in some developed countries unraveled, currencies of those nations were hit, with Turkey's lira falling to a record low against the dollar, and Argentina's peso down sharply against the U.S. currency.
The Dow Jones Industrial Average, which dropped 175 points on Thursday, closed down 318 points, or 1.96 percent, at 15,879.11. The last time it closed down at least 300 points was last June 20. The Dow lost 3.5 percent for the week and is now off 4.2 percent since the start of the year.
The S&P 500 fell 38 points, or 2.09 percent, to 1,790.29, with industrial companies hardest hit, and telecommunications the strongest performer of its 10 major sectors. The weekly drop of 2.6 percent was its worst week since June 2012.
The Nasdaq declined 90 points, or 2.15 percent, to 4,128.17. It lost 1.7 percent in the week and is down 1.2 percent for the year.
"While 2013 turned out to be a stellar year for U.S. equities, the climate proved unsavory for emerging markets," slammed by the perceived threat of rising U.S. yields resulting from a prospective slowdown by the Federal Reserve of its asset purchases, said Andrew Wilkinson, chief market analyst at Interactive Brokers.
"Emerging-market currencies have been coming under pressure causing some to erroneously point out it is because of the Fed taper. It is more because of political instability in countries like Argentina and Turkey, which is just another reason to stay underweight EM," said Nick Raich, CEO at the Earnings Scout.
Emerging-market currencies continued to get hammered on Friday, with Turkey's lira falling to a record low against the dollar, and Argentina's peso down sharply against the U.S. currency. European and Asian markets closed down as a result.
European stocks suffered their biggest one-day slide in seven months, as concerns about economies and currencies in Latin America triggered profit taking after a recent sharp rally.
"The sell-off has been sparked by mounting worries over emerging markets, with Argentina in the spotlight today," FXCM analyst Vincent Ganne said. "Investors are getting nervous about a potentially excessive exposure to equities, and have decided to trim their positions, turning to bonds and gold instead."
Argentina's government decided on Friday to loosen foreign exchange controls, a day after the country's peso suffered its steepest daily decline in 12 years.
"While we can't argue with real selling of hard emerging-market currencies and bonds as investors pull in their horns, the pressure on U.S. stocks in the midst of decent corporate earnings seems somewhat misplaced. For now though, emerging markets can't seem to escape the shadow of the Fed," Wilkinson said.
In New York, the CBOE Volatility Index, or VIX, a measure of investor uncertainty, jumped nearly 32 percent to 18.14.
For every stock rising, more than six fell on the New York Stock Exchange, where 919 million shares traded. Composite volume exceeded 4.6 billion.
The yield on the 10-year note fell 6 basis points to 2.725 percent; gold for February delivery gained $2 to finish at $1,264.30 an ounce, up 0.9 percent for the week, and crude-oil futures for March delivery slipped 68 cents to $96.64 a barrel, up 2.4 percent for the week.
On Thursday, stocks fell sharply after a measure of Chinese manufacturing sparked concerns about the country's economic growth.
(Reuters contributed to this article)