Wall Street logged its worst week so far this year as investors worried that negotiations over a Greek bailout have unraveled, sending major U.S. stock indexes lower.
Investors had mostly shrugged off worries about Europe's efforts to contain its debt crisis, with the Dow Jones industrial average up 4.6% since January. However, the blue-chip index shed nearly half a percentage point this last week after European leaders turned down the latest plan to bail out Greece.
That pushed the Dow to its worst one-day drop in 2012 as it fell 89.23 points, or 0.7%, to 12,801.23 on Friday. The index had otherwise been within striking distance to cross 13,000 for the first time since 2008.
The broader Standard & Poor's 500 index closed down 9.31 points, or 0.7%, to 1,342.64. It was the first negative week of the year for the S&P 500.
In addition to the European situation, a survey from the University of Michigan showed that consumer confidence had unexpectedly dropped in January.
The constantly changing news out of Europe illustrates again how many actors are able to shift the course of the debt crisis there, and just how many chances there are for it still to go off the rails.
In rejecting the Greek agreement late Thursday, European leaders have said they want all three Greek political parties to sign off on the deal so that they cannot back out later. Greek politicians will also have to find about $429 million more to cut from their budget.
The demands immediately caused unrest in Greece, where unions went on strike and Cabinet ministers resigned, raising questions about whether a political consensus is possible.
The problems in Europe have generally been overshadowed in recent weeks by the signs of a U.S. economic recovery. Even the market's response Friday was relatively tame compared with the big market swings that met even the smallest news out of Europe last fall.
Although the Greek economy is growing steadily worse, there is a growing belief among investors that a crisis there may not have wide repercussions in the U.S.