US stocks fall on fear of strong dollar, Greek turmoil

US equities finished firmly lower, with the Dow Jones Industrial Average tumbling 507.65 points (2.87 percent) to 17,164.95.

The broad-based S&P 500 fell 56.83 (2.77 percent) to 1,994.99, while the tech-rich Nasdaq Composite Index gave up 122.64 (2.58 percent) at 4,635.24.

Volatility has picked up considerably in recent weeks in equity markets, with daily swings in the Dow of 100 points or more an increasingly frequent occurrence.

"You really have a lot of issues on investors' plates," said Mace Blicksilver, director of Marblehead Asset Management. "Unstable is the only way to describe it."

Blicksilver is in the camp of analysts who see parallels between current economic conditions and those of the late 1990s, when a big drop in oil prices and a surging dollar preceded a correction in equity markets.

This week, oil prices fell to fresh multi-year lows after US crude inventories hit a record peak.

US oil prices jumped more eight percent Friday in a surge that underscored that volatility is not limited to stocks. Major cuts in capital spending by Chevron, ConocoPhillips and others raised concerns over the impact on jobs and key petroleum-oriented economies, like Texas.

The dollar moved generally higher following a US Federal Reserve statement Wednesday that said US economic activity was expanding at a "solid" pace and kept alive the chance of an interest rate increase in 2015.

The dollar also came into sharp focus after Dow members Microsoft, Procter & Gamble and others cited the strong greenback as a factor in weak earnings, pressuring stocks.

P&G finished the week 6.4 percent lower after it said 2015 earnings would drop at least $1.4 billion due to currency effects. Microsoft ended the week 14.4 percent lower.

Adding to the worries was the election Sunday of the hard-left Syriza party in Greece, which has pledged to fight austerity measures imposed by international lenders.

Greek officials refused to meet European Union and International Monetary Fund officials and rejected fresh loans needed to keep the government running.

Stocks also reacted negatively after the Commerce Department's estimated fourth-quarter economic growth at 2.6 percent, a steep decline from the robust 5.0 percent level in the prior quarter.

There were strong aspects to the report, such as a sharp pickup in personal consumption spending. But investors reacted more to a drop in business investment, as well as to a duller headline number.

"Some people were a little overexcited and thought that the trajectory of growth in the US economy was going to be faster" after two strong quarters, said Scott Wren, senior equity strategist at Wells Fargo Advisors.

"Things are good, not great," he said. "Growth is modest."

Wren expressed confidence that the US stock market will post solid gains in 2015. He dismissed the recent market retreat as nothing more than "noise."

Market bulls could point to some positive data, including the highest reading for US consumer confidence in more than seven years. There were also some strong earnings reports.

Apple surged 7.3 percent after it announced record $18 billion profits for the December quarter on blockbuster sales of its big-screen iPhone models, especially in China.

Boeing was among the other standouts, soaring 9.7 percent on better-than-expected earnings and forecasting more strong growth for commercial airplanes.