The Dow had lost almost 700 points, or 2.5%, at the closing bell, with weak earnings reported from several American business behemoths, including Exxon Mobil and Google's parent company Alphabet.
Several giant USA companies dropped after reporting weak earnings, including Exxon Mobil and Alphabet.
The bond market has also been struggling with the idea that rising inflation could push the Federal Reserve to raise interest rates more than the three times central bank officials have forecast for this year.
The S&P 500 was down 53 points, or 2 percent, at 2,768 and the Nasdaq Composite was down 119 points, or 1.6 percent, at 7,266. The Dow ended the day at 25,520.96 points, a 2.54 percent decrease from the close of markets Thursday.
The S&P 500 and Nasdaq also sunk Friday by 1.4 percent and 1.2 percent respectively.
But worries about inflation grew when the report showed that average hourly wages grew 2.9 percent from a year ago - the largest increase since June 2009. Bund yields reached a fresh two-year high, while the euro and British pound weakened.
Sony, which recently posted stellar quarterly earnings, especially in its entertainment division, was the only major media conglomerate to trade higher on Friday, closing up 6 percent.
Bond prices declined again Friday, pushing yields higher. The yield on the 10-year Treasury note - a widely used gauge for overall interest rates - rose to more than 2.8 percent, the highest level since early 2014.
The U.S. stock market roared out of the blocks in 2018, before being reined in this week by rising bond yields.
Turkish troopers in Syria go away path of geotagged Instagram posts
Turkey launched "Operation Olive Branch" against Kurdish forces in Afrin more than a week ago. Macron said it could be "a real problem" if "Syrian sovreignty is not respected".
This week's market pullback has come even as USA economic data continues to reflect strong growth.
Friday's Dow drop tells a different economic story than the Bureau of Labor Statistics' jobs report that was also released Friday.
Google's parent company Alphabet slumped 4.6 percent Friday after reporting results that missed analysts' forecasts. Shares in Exxon shed $5.09 to $83.98.
Apple declined 3.4 percent after the technology company said it sold 77.3 million iPhones in the last quarter, below the 80 million analysts expected. The stock was down $4.36 to $163.42. Visit MarketWatch.com for more information on this news. Amazon shares gained $63.78 to $1,453.78.
Gold futures and copper prices both decline.
USA crude fell $1.02 to $64.78 per barrel and Brent fell $1.34 to $68.31.
The stronger picture for economic growth in the United States also triggered a rally for the dollar on worldwide exchanges, with the pound falling by about 1% against the American currency.
First-quarter profit growth for S&P 500 companies is now estimated at 17.7 percent, according to Thomson Reuters data, up from 11.7 percent on December 20, when both houses of Congress approved the tax revamp. Germany's DAX slid 1.7 per cent, while France's CAC 40 lost 1.6 per cent.
The Standard & Poor's 500 index gave up 30 points, or 1.1 percent, to 2,791.