By Jem Bartholomew and Xie Yu
U.S. stocks fell Friday, with the Dow Jones Industrial Average on track to close out its worst week and month since March.
The Dow dropped 1.6%. It has already shed more than 7% this week, putting it on track for its worst weekly performance since the height of the pandemic-induced market tumult.
The S&P 500 fell 1.9%, pulled down by declines in all 11 sectors. The tech-heavy Nasdaq Composite dropped 2.9% following a sharp selloff in big technology stocks.
Volatility has dominated markets in the week leading up to the Nov. 3 U.S. elections. Investors have been spooked by a record high in coronavirus infections in the U.S., fresh lockdowns in Europe that threaten economic growth, the possibility of a contested U.S. election, and a mixed bag of earnings from big tech.
"Markets are concerned that we are replaying February and March," said Chris Beauchamp, chief market analyst at IG Group. "It probably still isn't in that category yet, but it is heading in the wrong direction."
U.S. households boosted spending in September, according to the Commerce Department. But even as consumers increased spending since the summer, economists expressed concerns that many are still left out of a recovery.
"It would be no surprise that the beneficiaries of this strong spending are the high income bracket households," said S&P Global's U.S. Chief Economist Beth Ann Bovino.
"If a large number of people are unable to participate in the expansion, the economy suffers."
Small stocks, which have outperformed their larger peers this month, also came under pressure. The Russell 2000 dropped 1.6%.
Meanwhile, earnings reports and guidance from technology companies weighed heavily on internet giants. Twitter plunged 20% after posting its slowest user growth in years and warning that uncertainty around the U.S. election could compress ad spending.
Apple shares dropped 5.2% after quarterly iPhone sales fell from a year earlier. That, combined with a delay in the launch of the company's new smartphone, led to iPhone revenue falling more than analysts had expected.
Big tech has driven the stock market recovery this year, but that means "when we see any disappointments on particularly high-multiple stocks, then obviously the magnitude of the downgrade or the earnings-miss becomes far greater," said UBS strategist Nick Nelson.
Shares of Facebook, Amazon.com, Tesla, Microsoft and Netflix all declined more than 2%.
"The big tech earnings were not that bad but markets did not respond positively, so that does suggest a deeper sense of negativity in the market," said Seema Shah, chief strategist at Principal Global Investors.
In contrast, shares of Google's parent Alphabet rose 3.7%. The company reported third-quarter profit that outstripped analyst estimates.
Shares of Exxon Mobil fell 2.1%, after it reported its third consecutive quarterly loss as the pandemic continued to sap oil demand.
The yield on the 10-year Treasury was 0.860% Friday, from 0.834% Thursday.
Overseas, the Stoxx Europe 600 wavered between gains and losses.
Europe is once again at the epicenter of the coronavirus pandemic, with the continent now recording more and faster-rising deaths than the U.S. in an abrupt reversal of fortunes. Fresh lockdowns by governments in response to the rising infection levels, led by France and Germany, are weighing on markets.
This week, "you've clearly got a big shift in tightened mobility restrictions, which of course have an impact on economic growth and corporate profits," said Mr. Nelson. "We've been relatively cautious for the last six weeks, thinking markets have maybe disconnected from the macro and the Covid news flow. And this week there's been an abrupt reconnection there."
The rise in infections across parts of Europe is stretching the capacity of hospitals in the worst-hit cities in France, Belgium, Italy and elsewhere. On a per capita basis, deaths from Covid-19 in Europe are now rapidly approaching U.S. levels, after running significantly below since May.
"The sentiment is just so whipsawed at the moment," said Andy Maynard, managing director of equities sales trading at China Renaissance Securities, citing the uncertainty surrounding U.S. elections and the resurgence of virus infections. While the election and U.S. stimulus negotiations were a focus for investors, "the bigger risk is actually on global economic recovery and what's happening to Covid, especially looking at Europe right now," he added.
In Asia, major markets ended the day sharply lower. South Korea's Kospi index dropped 2.6%. China's Shanghai Composite Index fell 1.5%, Hong Kong's Hang Seng declined 2% and Japan's Nikkei 225 shed 1.5%.
--Dawn Lim and Joanne Chiu contributed to this article.
Write to Xie Yu at Yu.Xie@wsj.com
(END) Dow Jones Newswires