NEW YORK (CNNMoney.com) - The Dow Jones industrial average sank to a four-month low Friday as investors couldn't pull together a recovery and awaited key inflation readings on tap for next week.

The Dow (down 46.90 to 10,891.92, Charts) fell 0.4 percent to its lowest level since Feb. 9. The broader Standard & Poor's 500 index (down 5.63 to 1,252.30, Charts) and the Nasdaq composite (down 10.26 to 2,135.06, Charts) both lost about 0.5 percent.

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All three major gauges had rallied earlier in the session, but couldn't hold on to gains, ending the week on a sour note.

The Dow was down 3.2 percent for the week while the S&P 500 was down 2.8 percent. The tech-fueled Nasdaq, which has fallen for six straight sessions, shed 3.8 percent.

"Markets are trying to catching their breath, given the volatility they've seen," said Steve Goldman, market strategist at Weeden & Co.

The Dow tumbled more than 170 points during Thursday's session, sinking along with stocks in markets around the world, before mounting a comeback in late trading. (Full story.)

But on Friday, investors succumbed to the inflation and interest rate worries that have hounded them for weeks.

Trading volume remains light, which suggests the market hasn't seen the end of the pullback, according to Fred Dickson, chief market analyst at D.A. Davidson & Co.

"Fed fears remain, and the real concern analysts are debating is how far will the Fed go and what does that mean for earnings estimates for [the second half]," he said.

Investors took in a report on the U.S. trade deficit in April, which showed oil import prices surged in April, contributing to the widening of the trade gap. (Full story.)

That offered a worrying inflation sign, but investors are looking to key reports set to be released next week for more direction on the inflation outlook.

Investors will take in readings on May consumer prices Wednesday. The Consumer Price Index rose a surprising 0.6 percent in April, sparking a wave of inflation fears when the report was issued last month.

Those jitters were heightened this week after a chorus of Fed officials, including Chairman Ben Bernanke, talked tough on inflation.

No other economic reports were released Friday, but Fed watchers took in a speech Bernanke gave at the commencement ceremony at the Massachusetts Institute of Technology, where he earned his Ph.D..

Bernanke didn't comment on the economic outlook, but said productivity remains strong, which is a good sign for the future.

The new Fed chief, who took over the helm of the central bank from Alan Greenspan Feb. 1, has sent what some complain are mixed messages about the central bank's intentions about rates.

Among the 30-share Dow, 22 stocks fell and 8 rose.

Honeywell (down $0.80 to $38.10, Research) fell 2 percent, leading declines on the blue-chip index.

General Motors (up $0.52 to $25.35, Research) was the biggest advancer, up 2 percent after its former parts unit Delphi Corp. said it reached an agreement with the United Auto Workers to offer buyouts to workers and expand its attrition plan to less senior workers.

Machinery supplier Caterpillar (up $0.63 to $67.52, Research) also gained nearly 1 percent after U.S. officials gave the company the green light to acquire Progress Rail Services, a provider of railway products and services.

Elsewhere, Take-Two Interactive Software (down $2.94 to $13.83, Research) sank 17.5 percent after the company posted a wider quarterly loss late Thursday. Citigroup and Kaufman Bros. also both downgraded the stock.

Apple Computer (down $1.52 to $59.24, Research) fell 2.5 percent. The company is facing opposition in Europe over the inability of consumers to play music downloaded from iTunes on devices made by companies other than Apple, according to the New York Times.

Texas Instruments (down $1.04 to $29.68, Research) issued a robust outlook for the current quarter late Thursday, but shares fell 3.4 percent after an analyst voiced concerns about slowing sales in the second half of the year.

Fellow chip firm National Semiconductor (up $0.58 to $24.49, Research) was upbeat though, boosted by an analyst upgrade.

Market breadth was negative. On the New York Stock Exchange, decliners beat advancers by a margin of nine to seven on volume of 1.59 billion shares. On the Nasdaq, winners topped losers by a margin of three to two as 1.78 billion shares changed hands.

U.S. light crude oil for July delivery gained $1.28 to settle at $71.63 a barrel on the New York Mercantile Exchange.

Treasury prices rose, lowering the yield on the benchmark 10-year note to 4.97 percent from 5 percent late Thursday. Treasury prices and yields move in opposite directions.

In currency trading, the dollar rose against euro and drifted lower versus the yen.

COMEX gold for August delivery fell $1.10 to $612.70 an ounce.