Blue-chip technology companies were hit particularly hard. Dell Computer, the most active Nasdaq issue, lost nearly two points.
Cutthroat competition among companies making processors for low-cost PCs have raised concerns that profit margins for chipmakers will shrink even further. That, in turn, could have a ripple effect throughout the technology sector, particular among hardware companies.
Intel gave up 2.5625 to finish at 127.5625, and rival AMD lost more than 11 percent to close at 16.8125. Networking giant Cisco Systems lost four points and finished the day at 101.25. Although Cisco isn't a PC company, it is considered a bellwether for the tech industry.
The Nasdaq index closed down 36.44 points, or 1.51 percent, at 2373.63, with volume topping 1 billion shares as declining issues led advancers 2,453 to 1,606. For the week, the index closed down 132 points, or 5 percent, erasing the prior week's gains.
In addition to falling chip prices, the market's decline was blamed on profit-taking and worries that today's surprisingly strong jobs report could signal an interest rate hike. Traders cited profit-taking after the jobs report, which showed the U.S. economy continued its strong pace in January.
Reuters contributed to this report.