US stocks tumbled on Friday as fears about the stability of the top two home financing providers, Fannie Mae and Freddie Mac, along with high oil price rises, clouded the economic outlook.
The slide capped a tumultuous week, in which the S&P 500 joined the Nasdaq and the Dow in a bear market.
The Dow Jones industrial average fell 128.48 points, or 1.14%, to 11,100.54. For the week, the Dow dropped 1.7%, its fourth straight weekly decline.
The Standard & Poor's 500 Index slid 13.90 points, or 1.11%, to 1,239.49. For the week, it fell 1.9%.
The Nasdaq Composite Index dropped 18.77 points, or 0.83%, to 2,239.08. It shed 0.3% for the week.
It was the Nasdaq and the S&P 500's sixth straight weekly decline, their longest weekly losing streaks since 2004.
Investors worried that the two pillars of the US housing market Fannie Mae and Freddie Mac could run short of capital, placing the fragile US economy at even greater risk.
The companies, which at one stage had lost almost half the value of their share prices, traded erratically and ultimately ended lower.
A jump in U.S. crude oil prices to a record above $US147 per barrel further soured investor sentiment on concerns about the impact of higher fuel costs on corporate profits and consumer spending.
Prices fell back later in the day, with US crude for August delivery settling at $US145.08 a barrel on the New York Mercantile Exchange.
Financial shares were among the biggest drags on the S&P 500 as new signs of distress in financial market spooked investors. An S&P financial index fell 2.6%.
Airlines' and retailers' stocks were among those most adversely affected by soaring oil prices. An airline index fell 5.6%, while an index of retailers shed 2.1%.
Asia-Pacific
Markets in the Asia-Pacific region have ended the trading week mixed.
On Friday, the NZX50 index was up 8 points to 3121 at the close.
Major stocks Telecom rose 2 cents to $3.39, while Fletcher Building fell 5c to $6.38. Michael Hill International was down 1c at 77 cents and The Warehouse slid 4c to $4.
The Australian share market rose 0.9% as resource stocks, led by gold and oil companies, surged on higher commodity prices and the banks pared early losses.
At 1615 AEST, the benchmark S&P/ASX200 index had firmed 42.5 points, or 0.86%, to 4,979.9, while the broader All Ordinaries added 47.3 points, or 0.94%, to 5,067.8.
The September share price index futures contract rose 27 points to 4,973 on a total volume of 20,301 contracts.
The spot price of gold was $US944.85, up $US15.75 on last night's Sydney close.
In Japan, share prices were down 0.21%, amid renewed concerns about the health of American financial institutions and the fallout from the credit crunch, dealers said.
The Tokyo Stock Exchange's benchmark Nikkei-225 index dropped 27.52 points to end at 13,039.69.
The broader Topix index of all first-section shares slipped 4.85 points or 0.38% to 1,285.91.
Hong Kong shares rose 1.7% on Friday, with the benchmark index closing above 22,000 for the first time in July. The Hang Seng Index ended up 362.77 points at 22,184.55 after opening barely changed. It rose 3.6% for the week.
