The Dow Jones industrial average fell 130 points in the first half-hour of trading. The Dow, S&P 500 and Nasdaq have all lost more than 10 percent this quarter, the first time that's happened since the financial crisis crested at the end of 2008.
Markets have been wracked this summer by growing fears about a possible default by Greece. Many European leaders and traders appear convinced that Greece will default in the coming weeks or months. It appears Greece's lenders and neighbors are preparing as best they can to prevent that from causing a worldwide financial panic.
As a result, traders have reacted quickly to news and rumors from Europe. Markets have gyrated wildly in some of the most volatile trading on record. The Dow Jones industrial average swung more than 100 points in more than half of the trading days this quarter.
Traders also have responded strongly to U.S. economic data, which has flirted with some positive news but mostly signaled a global slowdown. A recession in the U.S. looks increasingly likely, mainly because of Europe's struggles and an apparent weakness in developing countries that have driven recent global growth.
At 9:50 a.m. Eastern time, the Dow fell 132 points, or 1.2 percent, to 11,022. American Express Co. fell the most of the 30 stocks in the average, 3.1 percent.
The Standard & Poor's 500 index lost 18, or 1.5 percent, to 1,143. The Nasdaq composite index dropped 43, or 1.7 percent, to 2,438.
The S&P 500 index is down 13.5 percent from the start of the quarter. That's the most since it fell 22.6 percent the three months ended Dec. 31, 2008.
Those months in late 2008 marked the worst financial disruption in recent history.4 Banks stopped lending to each other, businesses and consumers. Some of the biggest financial companies failed or were sold to each other in shotgun marriages. The government stepped in with trillions in emergency aid for banks, other financial companies and automakers.
Excluding that unsettling period, the S&P has not dropped this much in a quarter for nine years.
The government said Friday consumers spent slightly more last month but earned less for the first time in nearly two years. That suggests that people are tapping their savings to meet higher gas prices and offset lost wages. The savings rate fell to its lowest level since late 2009.
In Europe, there were more signs of division. European Union officials swatted down a proposal by Germany and France to manage their shared currency through meetings of nations' leaders, rather than by a central bureaucracy.
Germany's DAX fell 2.7 percent, and France's CAC-40 fell 2.4 percent. Asian markets mostly closed lower.
Governments in Europe currently are voting on an expanded, more-powerful bailout fund for nations that use the currency. Germany's parliament gave final approval Friday afternoon. Austria's parliament also was set to vote on the new powers.
Ingersoll-Rand plunged 15 percent, the most of any stock in the S&P 500 index, after cutting its profit forecast for the third and fourth quarters. The machinery maker said North American sales of climate-control and security products were weak.
Micron Technology Inc. plunged 10.1 percent after the chipmaker disappointed investors with a quarterly loss. Analysts had expected a profit. Sales were hurt as the company transitions to selling a newer array of memory chips.