Stocks fell Friday as concerns emerged that the deep spending cuts called for Europe's bailout plan could slow down the continent's economy. The euro dropped to a 19-month low.
European stock markets fell more than 3 percent, leading U.S. stocks lower. Investors seeking safety from the fresh signs of distress in financial markets piled into Treasuries and gold, which hit another record.
Currency traders have been moving out of the euro throughout the week because of concerns that strict cost-cutting measures in countries like Greece, Spain and Portugal will slow the continent's economy to a crawl in the coming years. Now stock investors are also looking at those potential long-term problems.
"Clearly the action in the euro is reflecting the fact that at least currency investors don't think the bailout plan plus the austerity measures are sufficient," said Uri Landesman, president of Platinum Partners in New York. "The euro is leading the market down."
Any significant slowdown in Europe's economy could put a crimp in the U.S. recovery as well. U.S. companies that export to Europe would face weaker demand, hurting their sales and profitability.
Credit card companies fell after the Senate voted to force them to reduce fees for debit card transactions. Visa fell 8.5 percent and MasterCard fell 7.4 percent.
Earlier in the week, stocks rose sharply after a nearly $1 trillion rescue package was launched by the European Union and International Monetary Fund in hopes of containing a debt crisis in Greece. However the bailout also calls for deep spending cuts, which investors worry may lead to slower economic growth.
The euro, which is used by 16 countries, slid as low as $1.2359 in morning trading in New York, its weakest point since October 2008. The euro has dropped more than 6 percent since the beginning of the month.
Better-than-expected reports on U.S. retail sales and industrial production didn't help stock prices.
In late morning trading, the Dow Jones industrial average fell 194.08, or 1.8 percent, to 10,588.87. The Standard & Poor's 500 index lost 25.71, or 2.2 percent, to 1,131.73, while the Nasdaq composite index fell 60.18, or 2.5 percent, to 2,334.18. Just before midday, all three major indexes fell 2 percent.
Stocks are set to extend losses that piled up on Thursday. A disappointing report on weekly jobless claims and downbeat forecast from department store Kohl's drove major indexes lower. Financial stocks were also slammed after the New York attorney general launched an investigation into eight Wall Street banks about their dealings in mortgage securities.
In stocks in the news, Visa Inc. fell $7.28 to $78.45 and MasterCard Inc. fell $17.10 to $215.21 after the Senate vote to curb fees on debit cards.
Gold hit a record of $1,249.70 an ounce before retreating to $1,226.10.
Investors on Friday looked past upbeat reports on April retail sales and industrial production.
The Commerce Department said sales rose 0.4 percent in April. That was double the forecast by economists polled by Thomson Reuters. It was the seventh straight monthly rise in sales, providing hope that a consumer rebound will hold and help the economy grow.
The Federal Reserve said industrial production rose 0.8 percent in April, better than the 0.6 percent growth forecast by economists. It was the biggest jump in output from the nation's factories, mines and utilities since January.
Manufacturing growth has been steady in recent months as the sector plays a leading role in the domestic recovery.
Eleven stocks fell for every one that rose on the New York Stock Exchange, where volume came to 503.68 million shares.
U.S. Treasuries, like gold, benefited from being viewed as a safe investment. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 3.43 percent from 3.53 percent late Thursday.
Overseas, Britain's FTSE 100 dropped 3.1 percent, Germany's DAX index fell 3.5 percent, and France's CAC-40 tumbled 4.7 percent.
The Russell 200 index of smaller companies lost 18.18, or 2.6 percent, to 691.67.
© Copyright 2017 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.