The stock market closed out its worst month in more than a year and a half as turmoil in the developing world sparked a broad decline in U.S. share prices.
The Dow Jones industrial average slumped nearly 150 points to end January with a 5.3% drop, its worst monthly performance since May 2012.
The Standard & Poor's 500 index lost 3.6% last month, though it is only back to where it was in mid-December.
Investors have been unnerved by the ongoing plunge in emerging-market currencies, which has exposed economic strife in countries such as Turkey, India and South Africa. The Federal Reserve's tapering of its economic stimulus program has turned an unwelcome spotlight on the financial challenges of developing nations.
Investors barreled into the emerging world in recent years in search of faster economic growth and better returns than seemed possible in the U.S. and Europe. But investors are fleeing amid concern that the global era of low interest rates papered over underlying economic problems and political disorder.
"It's spooking people and they think it may not be such a bad time to put some cash in the mattress," said Uri Landesman, president of Platinum Partners, a hedge fund in New York. "I personally don't think it's a sign of the end of the bull market [but] I think we're going to see a dramatic correction."
Major U.S. indexes also have been weighed down by sharp hits to bellwether stocks such as Amazon.com and Apple Inc.
Shares of Amazon.com skidded 11% on Friday after its quarterly revenue fell short of analyst estimates. Investors were nonplused by the company's announcement that it may raise the annual fee for its Prime shipping program.
Apple slumped 8% on Tuesday after the technology giant reported disappointing fiscal first-quarter earnings, which raised questions about the outlook for sales of its flagship iPhone.
The market's January slump has raised concerns about how share prices will fare the rest of the year.
Over the last 85 years, the direction of the S&P 500 in the first month of the year has foreshadowed its annual performance 73% of the time, according to S&P Dow Jones Indices.
The pattern holds less frequently when stocks fall in January. A first-month tumble led to a full-year decline 60% of the time.
"It's funny that the pullback has gotten a ton of attention, and yet we've essentially just undone the last two weeks of December," said Jack Ablin, chief investment officer of BMO Private Bank. "Rallies don't get as much attention as sell-offs."
On Friday, the Dow fell 149.76 points, or 0.9%, to 15,698.85. The S&P 500 was off 11.60 points, or 0.7%, to 1,782.59. The Nasdaq composite index eased back 19.24 points, or 0.5%, to 4,103.88.
By historical standards, stocks are overdue for a setback.
Since World War II, the S&P 500 has averaged a decline of at least 10% once every 18 months, said Sam Stovall, chief equity strategist at S&P Capital IQ. It has currently gone 28 months without one.
The emerging-market sell-off appears to have caught investors flat-footed.
The basic problem is that investors are no longer willing to overlook the developing world's economic uncertainty given the expected rise in global interest rates in coming years.
Low rates fed solid economic growth, which drew a torrent of money from foreign investors.
But investors worry that low rates artificially pushed up emerging-market growth rates and that many countries will struggle in coming years. Turkey, for example, has been hurt by a rising current-account deficit and high-level political scandal.
The capital flight has pounded the currencies of Turkey, South Africa, Russia and others. Turkey, India and Argentina have raised interest rates to stem the capital flight, though with little success.
Fear of slowing economic growth in China has exacerbated the worries. Disappointing manufacturing data sparked concern that the country will reduce purchases of raw materials from Brazil and other countries.
The MSCI emerging-markets index has tumbled more than 10% since late October.
"In general, these are countries where they have enjoyed high rates of growth and that growth is slowing," Ablin said. "And combine that with inflation pressure, you have stagflation worries and that is not a great investing environment."