The futures contract for the Dow Jones industrial average fell 110 points, or 0.8 percent, to 12,467. Futures contracts for the Standard & Poor's 500 dropped 14 points, or 1 percent, to 1351.60 and the Nasdaq 100 lost 17.8 points, or 0.7 percent, to 1,760. On Thursday, stocks sank as investors fretted over a rise in unemployment claims and the prospect of more bank failures. Federal Reserve Chairman Ben Bernanke warned that while large U.S. banks will likely recover from the recent credit crisis, other banks are at risk of failing.

The euro traded at $1.5215 in London, after reaching new highs on Thursday. The slide in the dollar has sent commodities prices soaring, and on Friday took oil to $103 a barrel for the first time.

Thomson/IFR is forecasting that the Commerce Department's personal income report will show a 0.2 percent rise in January, which would be down from a 0.5 percent gain in December. Personal comsumption is expected to rise by 0.2 percent also for the month and that would match the prior month's gain.

The University of Michigan's final consumer sentiment reading for February is expected to fall to 69 from 69.6.

The Chicago purchasing managers index for this month is expected to have a reading of 48.5, which would show that the factory sector is shrinking in that region.

There were heavy losses in overseas trade. Tokyo's Nikkei closed down 2.32 percent. London's FTSE lost 1.06 percent, Paris' CAC 40 gave up 1.15 percent and Frankfurt's DAX forfeit 1.24 percent.