The Nasdaq also set a 10-year record with a 8.4 percent plunge this week, the worst since November 2008.
Another day of big losses Friday left the USA market with its worst week in more than seven years.
Major indexes fell more than 1 percent in midday trading Thursday, bringing their losses over the previous six days to about 6 percent.
The S&P 500 and the Dow, are both in correction territory (greater than 10% decline from recent top), and are also in a position to post their worst December performance since the Great Depression in 1931. Stocks are cheap, presenting buying opportunities for smart investors willing to take on a bit of risk. With markets already shaky, any ongoing political dysfunction could lead to a dip in investor confidence, and hobble the economy's chances for continued growth.
As they look ahead, investors are finding more and more reasons to worry. -China trade dispute before the March 1, 2019 deadline.
New Commerce Department data released Friday showed the United States economy slowed more than expected in the third quarter, although the economy still appears to be robust. And rising interest rates in the USA could slow its economy even more.
The index is now down more than 10 percent for December, putting it on track for its worst monthly loss in nearly a decade.
Stocks usually end the year with a flourish, and December is usually the best month of the year for the market.
Dodgers shake up lineup, trade Puig, Kemp to Reds for two prospects
The Los Angeles Dodgers and Cincinnati Reds have made a blockbuster trade that will send outfielder Yasiel Puig to the Queen City. The 28-year-old has one year of team control remaining and is projected by MLB Trade Rumors to earn $11.3 million in 2019.
"It's the old saying, the generals finally got hit", said Quincy Krosby, chief market strategist at Prudential Financial in Newark, New Jersey. Even with the drop since late August, Nasdaq is almost 400 percent above its March 2009 low, with a total return of more than 456 percent.
As investors adjusted to the prospect of a weaker economy and lower long-term interest rates, the dollar fell to 111.11 yen from 112.36 yen. It's widely expected to slow down, but traders are concerned the cooling might be worse than they previously believed.
The Standard & Poor's 500-stock index fell 2.1 per cent. The S&P 500 is now down 7.7 per cent for the year and the Nasdaq is on the verge of a "bear market", which is a drop of 20 per cent from its peak this year.
The Dow Jones Industrial Average closed down 464.40 points, or 1.99 percent to 22,859.26 after being down by as many as 679 points earlier in the day. The Nasdaq skidded 195.41 points, or 3 percent, to 6,332.99.
The Russell 2000 index of smaller companies dropped another 34 points, or 2.6 percent, to 1,314.
European markets rose slightly and Asian markets were mixed. The day before, almost 3,000 stocks hit their low for the year, the most in any one day since October 2008.
Smaller company stocks have been crushed during the recent market slump because slower growth in the US will have an outsize effect on their profits. USA crude fell 1 percent to $45.41 a barrel, while Brent fell 1.5 percent to $53.52.