Analysts said trading was light, contributing to sharper price swings.

"The market has been so strong recently, people are trying to take some gains and head out of the city," said Peter Dunay, chief market strategist at Wall Street Access, a New York-based brokerage firm.

The Dow closed down 89.99, or 1 percent, at 8,989.05, having gained 67 points yesterday. The last time the blue chips closed below 9,000 was June 9, when they finished at 8,980.00.

The broader market also finished lower. The Nasdaq composite index declined 8.73, or 0.5 percent, to 1,625.28. The Standard & Poor's 500 index fell 9.60, or 1 percent, to 976.22.

For the week, all three main gauges declined, with the Dow falling 2.3 percent, the Nasdaq declining 1.2 percent and the S&P losing 2 percent. It was the Nasdaq's second losing week in three.

The Commerce Department reported today that consumer spending edged up by 0.1 percent in May for the second month in a row. Personal incomes, meanwhile, rose by 0.3 percent, compared to a 0.2 percent gain in April.

The increase in consumer spending in May fell short of analysts' expectations of a 0.2 percent gain; the income growth matched estimates.

Meanwhile, the University of Michigan said its June report on consumer sentiment declined to 89.7, compared to 92.1 in May. Still, the reading was better than economists' expectations.

Robert Harrington, co-head of listed block trading at UBS, said trading was choppy today because of window-dressing, or an attempt by fund managers to make their holdings look as good as possible at a quarter's end.

"We've had a good quarter, so some people are repositioning their portfolios," he said.

Stocks have rallied in the past three months, but analysts say investors are now searching for more solid evidence the economic recovery is back on track. The upcoming second-quarter earnings season will be particularly important in offering investors guidance, they say.

Nike dropped $3.85 to $53.08 after the athletic shoe and apparel maker reported a quarterly profit that fell a penny shy of analysts' estimates.

Abbott Laboratories fell $1.22 to $43.60 after the pharmaceutical company said it will take a $622 million second-quarter charge to settle a civil and criminal probe into its marketing practices.

Gainers included Genentech, which rose 85 cents to $73.60, after the biotech company received fast-track designation from the Food and Drug Administration for its Avastin cancer treatment.