With two hours to go in the trading day, the Dow Jones industrial average was down more than 200 points and on pace for its worst finish since June. The broader stock market fared even worse in percentage terms.
Disappointing results from three giants of the Dow — Microsoft, General Electric and McDonald's — were to blame.
Financial analysts expect corporate earnings for July through September to be lower than the same period a year ago, which would be the first yearly decline in three years.
"And once you get one quarter of negative earnings, it's a precursor," said Doug Cote, chief market strategist at ING Investment Management in New York. "It's the cockroach theory: if you find one, there's probably many more."
The Dow was down 207 points, or 1.5 percent, at 13,341. The Standard & Poor's 500 index was down 24, or 1.7 percent, at 1,432. The Nasdaq composite index, heavy with technology companies, lost 60 points to 3,012, a 2 percent decline.
All 10 industry groups in the S&P 500 fell, led by materials and technology stocks. For a time Home Depot and Bank of America were the only stocks in the Dow trading higher for the day, but by 2 p.m. they were lower, too.
McDonald's profit shrank as a strong dollar hurt international results, which account for two-thirds of its business. The fast-food giant's stock lost $3.51, more than 4 percent, to $89.35.
Sagging PC sales and trouble in Europe took a toll on Microsoft's net income. Its stock lost 89 cents, or 3 percent, to $28.60.
General Electric, a bellwether of the economy, fell 3 percent. The company reported stronger profits early Friday, but its revenue missed Wall Street's expectations.
Orders for new equipment and services sank, mainly because wind turbine orders have fallen because a key U.S. federal subsidy for wind power expires at the end of the year. GE's stock lost 60 cents to $22.21.
As corporate earnings roll in, banks and so-called consumer discretionary companies, which include luxury stores and hotels, are projected to report the best growth.
Analysts expect companies dealing in metals and other materials to report the worst results, followed by energy companies. But it's technology companies like IBM, Intel and Google whose weak results have grabbed the most attention.
Weak earnings from Google and a rise in claims for unemployment benefits helped pull the stock market lower Thursday. That snapped a four-day run of gains for the Dow. Google fell again Friday, giving up $14.14 to $680.86.
For the week, the Dow remains up barely — 0.1 percent.
In other Friday trading, the yield on the 10-year Treasury note slipped to 1.77 percent from 1.83 percent late Thursday.
Among other stocks making big moves:
— Chipotle Mexican Grill plunged 14 percent after the burrito chain forecast that revenue growth would slow sharply next year. The stock had been a favorite among investors thanks to super-fast growth in recent years. The stock fell $41.32 to $244.61.
— Capital One Financial surged 6 percent, making it the top performer in the S&P 500. Capital One's quarterly results, reported late Thursday, easily trumped analysts' estimates as profits jumped 47 percent. The lender's purchase of both the online bank ING Direct and HSBC's U.S. credit-card division helped propel loan revenue. Capital One's stock gained $3.30 to $60.60.
— Advanced Micro Devices, the world's second-largest maker of microprocessors, plunged 14 percent. AMD said late Thursday that sales of its chips have dwindled as buyers shift away from personal computers in favor of tablets and smartphones. It also plans to cut 15 percent of its workforce. AMD lost 28 cents to $2.25.