All three major indexes ended sharply lower, having quashed a brief rally early in the session.

The S&P and the Dow notched their third consecutive weekly declines, and all three indexes posted their second straight monthly losses.

In the first nine months of 2022, Wall Street suffered three quarterly declines in a row, the longest losing streak for the S&P and the Nasdaq since 2008 and the Dow's longest quarterly slump in seven years.

"It's another ugly day to end an ugly quarter in what’s looking like a very ugly year," said Ryan Detrick, chief market strategist at Carson Group in Omaha, Nebraska. "Investors will look back and realize this was the year the Fed pulled a total 180 on their views on inflation and quickly turned incredibly hawkish."

The Federal Reserve has rattled markets by engaging in its most relentless series of interest rate hikes in decades in order to rein in stubbornly high inflation, which has many market participants eyeing key economic data for signs of a looming recession.

"The realization that the Fed is doing anything they can to combat 40-year-high inflation has investors worried they will push the economy over the edge and into recession," Detrick added.

The Commerce Department's personal consumption expenditures (PCE) report did little to assuage those fears, showing that while consumers continue to spend, the prices they are paying have accelerated, drifting further beyond the Fed's inflation target and all but ensuring the central bank's hawkish monetary policy will continue longer than investors had hoped.

Recession fears also echoed through dire warnings from Nike Inc and cruise operator Carnival Corp, both citing inflation-related margin pressures.

According to preliminary data, the S&P 500 lost 51.74 points, or 1.42%, to end at 3,588.73 points, while the Nasdaq Composite lost 153.77 points, or 1.43%, to 10,583.73. The Dow Jones Industrial Average fell 467.12 points, or 1.60%, to 28,758.49.

Corporate earnings reports for the quarter that ends with Friday's closing bell will begin landing in a few weeks, and analyst expectations are trending downward.

Analysts now see annual S&P 500 earnings growth of 4.5%, on aggregate, down from the 11.1% estimate when the quarter began.

Quarter-end fund reallocations and so-called "window dressing" is likely contributing to the session's volatility.