The worst quarter for the stock market since the financial crisis ended on another down note.
Stocks fell broadly Friday on fresh signs that Europe's debt problems and the U.S. economy continue to languish. Makers of raw materials, industrial companies and banks — which would have the most to lose if the economy turns sour — had the biggest losses.
The Dow Jones industrial average dropped 240.60 points, or 2.2 percent, to 10,913.38. Hewlett-Packard Co. fell the most of the 30 stocks in the average, 5.6 percent. Aluminum maker Alcoa Inc. was close behind with a 4.9 percent decline. JPMorgan Chase & Co. fell 4.1 percent.
The broader S&P 500 index shed 28.98, or 2.5 percent, to 1,131.42. All 10 industry groups in the S&P 500 index fell.
The Nasdaq composite index fell 65.36, or 2.6 percent, to 2,415.40.
Markets have been wracked this summer by growing fears about a possible default by Greece and the increasing likelihood of a global recession. Uneven economic data have touched off sudden bouts of buying and selling. The Dow, S&P 500 and Nasdaq each lost more than 12 percent this quarter, the first time that's happened since the financial crisis crested at the end of 2008.
The S&P 500, the benchmark for most U.S. stock mutual funds, has lost 14.3 percent since July 1, the start of the third quarter. That's the biggest quarterly drop since the three months ended Dec. 31, 2008, when global financial markets seized up. Excluding that period, the S&P has not dropped that much in a quarter for nine years. The Dow dropped 1,500.96 points, or 12.1 percent, over the same time frame.
"The market has really seen some damage this quarter," said Mike Hurley, portfolio manager of Highland Trend Following Fund.
The weakness appears to be the start of a longer decline, Hurley said, because bonds are increasing in value and interest rates are low. Traders also are selling commodities such as oil, which would lose value in an economic downturn.
"Lower interest rates and commodity prices are definitely an indication that the market thinks economic activity is going to be weak," Hurley said.
Stocks in France, England and Germany fell on the latest signs of discord among European leaders. Germany and France proposed managing the region's shared currency through meetings of national leaders, rather than by centralized institutions. The head of the European Commission balked at the proposal.
Persistent squabbling over financial policy has been a major obstacle to achieving a lasting solution to Europe's debt crisis. France and Germany, the currency union's strongest economies, want countries to coordinate their spending and borrowing more closely. Other countries see that as a threat to their sovereignty.
Many European leaders and traders believe Greece will default in the coming weeks or months. Greece's lenders and neighbors are preparing as best they can to prevent that from causing a worldwide financial panic.
As a result, traders have reacted strongly to news and rumors out of Europe about how the crisis is being addressed. Markets gyrated wildly this summer in some of the most volatile trading on record. The Dow Jones industrial average swung more than 100 points in more than half of the trading days this quarter.
Traders also have made big moves in response to U.S. economic data, which has mostly suggested a slowdown. A recession in the U.S. looks increasingly likely, mainly because of Europe's struggles and signs of weakness in developing countries like China that have been driving global economic growth.
The government said Friday U.S. consumers spent slightly more in August, but earned less for the first time in nearly two years. That suggests that people are tapping their savings to pay for costlier gasoline and to offset lost wages. The savings rate fell to its lowest level since late 2009.
Micron Technology Inc. plunged 14 percent, the most of any company in the S&P 500 index, after the chipmaker disappointed investors with a quarterly loss. Analysts had expected a profit. Sales were hurt as the company transitions to selling a newer array of memory chips.
Ingersoll-Rand dove 13 percent after cutting its profit forecast for the third and fourth quarters. The machinery maker said North American sales of climate-control and security products have been weaker than expected.
Four stocks fell for every one that rose on the New York Stock Exchange. Volume was above average at 4.7 billion shares.