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Updated from 4:04 p.m. EDT

Blue-chips plunged Friday, ending a week of big swings, as three of the


most widely held components released troublesome news and economic data continued to confound investors.

The Dow Jones Industrial Average closed down 296 points, or 3.7%, at 7701, while the


fell 23 points, or 1.8%, to 1199. The

S&P 500

fell 28 points, or 3.3%, to 827.

Drugs, consumer staples, networking, telecom, airline, paper and gold sectors all came under considerable pressure, while health care, computer hardware and software showed some strength. Market breadth was negative, with decliners outpacing advancers 11 to 5 on the

New York Stock Exchange

and 3 to 2 on the Nasdaq. Volume was about 1.4 billion on the NYSE and 1.3 billion on the Nasdaq.

The U.S. market faced a three-pronged reality check Friday from Dow components

General Electric

(GE) - Get General Electric Company Report

, which was downgraded on earnings concerns;

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Philip Morris

(MO) - Get Altria Group Inc Report

, which lowered 2002 guidance; and

SBC Communications


, which is cutting 11,000 jobs. Philip Morris fell 11.4%, GE shed 7.3% and SBC dropped 8%.

The market also faced a profit warning from



, which said before the bell that 2002 pro forma earnings will be $2.22 to $2.32 a share, down from previous estimates of $2.49. The company cited weak results for Premarin, its vaccines and its animal health and consumer divisions. The stock fell 19.1% to $31.10.



(C) - Get Citigroup Inc. Report

reportedly will agree to separate its investment banking and stock research divisions, and pay a fine that could be in the hundreds of millions of dollars to end a probe into potential conflicts of interest. Citigroup's shares fell 1.7% to $29.02.

In economic news, the University of Michigan released its final reading on consumer sentiment through the middle of September. The figure was revised to 86.1 from a preliminary 86.2, which is about what economists were predicting. Also, the government released its final revision of second-quarter gross domestic product, upping the growth rate to 1.3%. That was slightly above the consensus estimate.

Another member of the Dow 30,

Procter & Gamble

(PG) - Get Procter & Gamble Company Report

, affirmed its earnings, sales and volume outlook for 2002, saying consumers' response to its products remains strong. P&G slipped 2.9% to $88.13.

In the chip-equipment group,

Varian Semiconductor


warned that fourth-quarter earnings would be lower than expected and set plans to cut 15% of its workforce amid slumping demand for capital equipment.

Merrill Lynch became the third major brokerage in about a week to drop its estimate of S&P 500 earnings. Merrill now sees the component companies earning a combined $45 a share in 2002. It cited shocks to the U.S. economy and the likelihood of a war with Iraq.

Elsewhere, industrial-equipment maker


(FLS) - Get Flowserve Corporation Report

saw its shares fall 38.3% to $8.70 after the company pared its third-quarter and full-year earnings estimates. The company said it expects to earn 30 cents to 32 cents a share in third quarter. Previous guidance called for a profit of 38 cents to 43 cents.

Treasuries were higher, with the 10-year bond trading up 24/32 to yield 3.67%.