Stocks were beaten down on Friday as Wall Street was hit by more bad news on inflation, which could provoke the Federal Reserve to boost interest rates.
The Dow Jones industrial average ended down 136.14 points, or 1.26 percent, at 10,655.15 after sliding 180.78 points Thursday. For the week, the blue-chip index was down 255.81 points after sliding nearly 300 points in the previous week.
But in the broader market, advancing issues led declines 1,492 to 1,441 on moderate volume of 721 million shares on the New York Stock Exchange.
The technology-heavy Nasdaq composite index fell just 1.52 points, or 0.06 percent, to 2,638.49.
In the inflation-sensitive bond market, the 30-year U.S. Treasury bond was off 14/32 with the yield jumping to 6.11 percent from 6.08 percent on Thursday.
There was mounting evidence of potential inflation. The Chicago Purchasing Managers Index showed manufacturing activity and prices paid by manufacturers both rose at a higher-than-expected rate in July.
The regional report followed Thursday's news that U.S. wage costs had jumped at the fastest pace since 1991 in the second quarter, which heightened worries the Fed might be ready to raise interest rates again to fight inflation.
The Chicago Purchasing Management index rose to 60.5 in July from 60.0 in June. Economists polled by Reuters had expected the index to come in at 58.8 points.
The Chicago purchasers' closely watched Prices Paid Index rose to 59.8 in July from 57.2 in June.
"It's troubling -- more troubling inflation news we didn't need," said Hugh Johnson, chief investment officer at First Albany Corp.
"That report will not quiet any fears about inflation that were started with the remarks from (Federal Reserve Chairman Alan) Greenspan and the Employment Cost Index report," he said.
The focus on Monday will be on the National Association of Purchasing Management's survey for July, which will show whether the rise in manufacturing prices pinpointed by the Chicago data was a nationwide problem.
Financial stocks bore the brunt of the selling. Among Dow components, American Express Co., fell 6-13/16 to 131-3/4, J.P. Morgan & Co. Inc. lost 2-3/4 to 127-7/8 and Citigroup Inc. was down 1-3/16 at 44-9/16.
First Union Corp. sank 1-3/4 to 46. On Thursday, the company named Ken Thompson president, succeeding John Georgius, who will retire.
Procter & Gamble Co. continued a rally from Thursday's session, climbing 2-5/8 to 90-1/2 after its earnings beat Wall Street's expectations.
Xilinx Inc. rose 2-5/8 to 62-3/8. Wall Street analysts said the company, which makes semiconductors used in cell phones and data networking equipment, took a very optimistic position on its business outlook at a meeting late Thursday.
NetlQ Corp. rose 3-3/4 to 16-3/4 in its initial public offering. The company makes software aimed at boosting the performance of Windows NT.
BCE Mobile Communications Inc. rose 5-9/16 to 38-1/4. Bell Canada, a unit of BCE Inc., said it will purchase the minority stake in BCE Mobile. Bell Canada already owns 65 percent.
Chicago Title Corp. jumped 6-1/16 to 42-3/4. The Los Angeles Times said the company was in merger talks with Fidelity National Financial Inc. Fidelity National Financial slipped 1/16 to 17-7/16.
The American Depositary Receipts of DaimlerChrysler AG fell 5-5/16 to 72-1/4 on the New York Stock Exchange. Investment banks trimmed their earnings forecasts for the carmaker after it posted disappointing quarterly results on Thursday. Ford Motor Co. fell 3-3/8 to 48-5/8 and General Motors Corp. dropped 3 to 60-15/16.
The Standard & Poor's composite index of 500 stocks fell 12.31 points to 1,328.72. The American Stock Exchange index rose 3.64 to 788.23.
The NYSE Composite index of all listed common stocks fell 4.74 to 626.07. The average share was down 33 cents.
The Wilshire Associates Equity Index -- the market value of NYSE, American and Nasdaq issues -- was 12,189.844, down 73.306, or 0.61 percent.
