Last week's strong rally further unravelled on Friday and risk aversion spread amid suspicions that banks have more to do to clean up their balance sheets.

The Nasdaq, despite being down for the week, rose as investors snapped up the biggest names in technology which have recently been hammered.

American Express shares led declines on the Dow, while Bank of America was one of the top drags on the S&P 500.

The S&P Financials were the worst performer of the 10 major industry groups, sliding 2.9 per cent.

'There's risk aversion that's definitely not helping things. People are wary of taking risk going into the weekend,' said Mr Justin Wiggs, a trader at Stifel Nicolaus Capital Markets in Baltimore. 'There selling in some of the large banks, some of the consumer finance names.'

Transportation stocks fell after oil futures jumped over 4 per cent on growing tensions between the government of Venezuela and Exxon Mobil in a dispute that could disrupt crude supplies from a leading oil exporter to the United States.

The Dow Jones industrial average was down 64.87 points, or 0.53 per cent, at 12,182.13.

The Standard & Poor's 500 Index was down 5.62 points, or 0.42 per cent, at 1,331.29.

The Nasdaq Composite Index was up 11.82 points, or 0.52 per cent, at 2,304.85.

Based on the latest closing levels, the Dow lost 4.4 per cent for the week while the S&P fell 4.6 per cent and the Nasdaq ended 4.5 per cent lower.

'A lot of people don't want to take a stand at this point, there's a lot of passive order flow, not big bets being taken,' Mr Wiggs said. -- REUTERS