Adam Shell and William Cummings

USA TODAY

Dow Jones industrial average has fallen more than 1%25 for second day in a row

Signs of slowing Chinese growth has investors spooked

Global markets on edge as appetite for risk dips amid new fears

U.S. stocks continued their slide Friday, tumbling sharply as jittery investors reacted to continuing turbulence in emerging markets.

The Dow Jones industrial average dropped back below the 16,000 mark, plunging 318.24 points, or 2%, to 15,879.11.

The Dow had its second straight day of triple-digit declines and its fourth straight session of losses. The blue-chip index dropped 3.5% for the week.

The Standard & Poor's 500 index tumbled back below the key 1,800 level, as it fell 38.17 points, or 2.1%, to 1,790.29. The S&P posted a 2.6% weekly loss.

And the tech-laden Nasdaq composite index was off 90.70 points, 2.2%, to 4,128.17. It fell 1.7% for the week.

Slowing growth in China and a move by the Federal Reserve to start cutting back on its easy-money policies has caused problems in many emerging economies, where currencies have come under intense selling pressure, raising fears of economic problems caused by rising inflation and capital outflows.

On Thursday, the Argentine peso plunged 15% versus the U.S. dollar, its biggest swoon since 2002. Similarly the Turkish lira hit a record low vs. the U.S. greenback.

"Market turbulence in Turkey ... and now Argentina has led to talk of a new crisis sweeping emerging markets," Neil Shearing, an analyst at Capital Economics told clients in a research note.

Stocks were under pressure despite some decent news on corporate earnings from key blue chip stocks. Before the bell, consumer products maker Procter and Gamble reported earnings that topped expectations by a penny. After the close of trading Thursday, computer software giant Microsoft topped profit expectations by 10 cents a share on strong sales of Xbox and cloud computing services.

Fears of an economic slowdown in emerging markets is forcing U.S. investors to reassess the amount of earnings U.S. multinational companies will get from abroad this year. The potential for less profit from abroad is also weighing on U.S. stocks, says David Semple, a portfolio manager at Van Eck Global.

Investors are also more willing to take profits after a stellar 2013 for U.S. stocks, given the current uncertainty roiling markets, Semple adds.

On Thursday, the Dow fell 175.99 points, or 1.1%, to 16,197. 35. The Standard & Poor's 500 index dropped 16.40 points, or 0.9% to 1,828.46 and the Nasdaq composite index fell 24.13 points, or 0.6% to 4,218.87.

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Signs of slowing growth in China and mediocre earnings reports have been enough to frighten investors who are concerned that the bull market may be on a collision course with its first significant price correction since 2011. The S&P 500 hasn't suffered a 10% correction since 2011 and has gone 148 days without a 5% drop, according to Strategas Research Partners.

Signs of rising investor risk aversion was evident in rising prices of U.S. government bonds. The yield on the 10-year Treasury note, which moves in the opposite direction of price, fell to 2.73% Friday, after a steep drop Thursday. The yield on the 10-year note, which ended 2013 at 3.03% and which Wall Street expected to rise this year, is now at its lowest level since late November.

Asian markets continued to fall on reports of a sluggish Chinese economy. Japan's Nikkei 225 index plummeted 304.33 points, 1.9%, to 15,391.56. Hong's Kong's Hang Seng index was also shaken, dropping 283.84 points, 1.3%, to 22,450.06. The Shanghai composite index bucked the downward trend and gained 12.21 points, 0.6%, to 2,054.39.

"Apart from the Shanghai Composite, the rest of the region seems to be struggling to gain traction heading into the weekend," Stan Shamu, a strategist at IG Markets in Melbourne, Australia, said in a report.

European benchmarks took heavy losses, with Britain's FTSE 100 index down 1.6% to 6,663.74, Germany's DAX index down 2.5% to 9,392.02 and France's CAC-40 diving 2.8% to 4,161.47.

Contributing: The Associated Press