Updated from 4:07 p.m. ESTStocks in the U.S. closed lower after a volatile session Friday as heavy losses in several insurance names derailed an early attempt to stop a three-day slide. The Dow Jones Industrial Average traded in a range of 300 points and finished down 59.91, or 0.49%, at 12,099.30. The S&P 500 was also negative, falling 8.06 points, or 0.6%, at 1325.19. The Nasdaq Composite lost 6.88 points, or 0.29%, to 2340.02. The broad market had opened sharply higher in a bid to stem a three-session selloff, but the rally was short-lived. Overall, the major averages had another dismal performance for the week. The Dow declined by 4%, and the Nasdaq retreated 4.1%. The S&P 500 was the worst performer, ending down 5.4% over the five sessions. "Psychology is deteriorating quickly," said Paul Mendelsohn, chief investment officer with Windham Financial. "The fear is taking over, and we're entering a panic stage here, which may mean we're getting closer and closer to the end of the decline." Volume was strong while breadth was negative. On the New York Stock Exchange 5.92 billion shares changed hands, as decliners topped advancers by a 7-to-4 margin. Volume on the Nasdaq reached 2.94 billion shares, with losers beating winners 2 to 1. Bond insurers were among the biggest losers weighing on the market. MBIA ( MBI) dropped 7.3% to $8.55 after Bank of America downgraded the stock to neutral from buy. Late Thursday, Moody's disclosed that's MBIA's ratings are on review for downgrade. Meanwhile, Fitch cut its rating for insurer Ambac ( ABK) to AA from AAA. Shares finished with a loss of 4 cents, or 0.6%, at $6.20. "These stocks have come down so much," said Mendelsohn. "As long as they don't go bankrupt, they may be undervalued at these levels. Some aggressive investors or bottom-fishers could come in here, as they've been totally destroyed." BofA cut Ambac and Security Capital Assurance ( SCA) to neutral from buy. Citigroup downgraded Ambac and MBIA to hold from buy. Among broadline insurers, AIG ( AIG) lost 4.1%, Allianz SE ( AZ) fell 4.7%, and AXA ( AXA) declined 2.2%. Several financial subsector indices also showed early strength before sinking. The Nasdaq Financial 100 Index was down 1.1%, the NYSE Financial Sector Index eased 1.1%, and the Amex Securities Broker/Dealer Index slid 0.8%. "We're seeing the end-phase of a five-year bull in the form of this schizophrenic market," said Paul Nolte, director of investments with Hinsdale Associates. "We're seeing a persistently weaker market. The early rally didn't have any meat to it, and there wasn't much in the way of supporting it." "Nine of the 11 days so far this year have seen 100-point swings on the Dow, so volatility is the norm now," said Art Hogan, chief market analyst with Jefferies. The upbeat start for stocks came on positive news early from General Electric ( GE), which posted a fourth-quarter profit from continuing operations that rose 15% from a year ago and met expectations. GE also repeated its full-year guidance, and shares finished up $1.10, or 3.3%, to $34.31. Fellow Dow component IBM ( IBM) said after the last close that it had fourth-quarter earnings that easily beat forecast. IBM's report came as no surprise, as the company offered preliminary figures Monday that were well above estimates. Additionally, IBM offered a full-year forecast that was well above the Thomson First Call average estimate. IBM advanced $2.30, or 2.3%, to $103.40. Also late Thursday, Advanced Micro Devices ( AMD) surprised investors by posting a narrower-than-expected quarterly loss, although the company had a writedown of $1.7 billion tied to the acquisition of graphics chipmaker ATI Technologies. AMD shares surged 11.5% to close at $7.07.