Stocks tumbled, then pared losses but again fell sharply in the final hour, sending the Dow and S&P 500 to their steepest monthly declines since May.
Stocks attempted to erase losses in mid-afternoon, with the Nasdaq briefly turning positive and the S&P 500 nearing unchanged, but the rebound ran out of steam.
Investor tension has been fueled by whipsaw trading in emerging markets with concern about the impact of the Fed's move to taper its monetary stimulus.
Home builders remained hot, backed by an improved economy and the recent drop in rates.
Early selling again coincided with yen strength, with the dollar/yen pair falling as low as 102 before staging a modest recovery; at that point, stocks also began heading higher.
Treasurys prices jumped, with the yield on the 10-year note dropping 4.5 bps to 2.649%, its lowest since early November; the benchmark yield closed the week 7 bps lower and 36 bps lower for the month.