By Anora Mahmudova, MarketWatch

NEW YORK (MarketWatch) -- U.S. stocks ended the week and the month with deep losses following a selloff on Friday, which was prompted by disappointing earnings, renewed fears over deflation in the euro zone and a continuing rout in emerging markets.

Disappointing earnings from Amazon.com Inc. and Mattel Inc. set the downbeat tone early in the session. The S&P 500 and the Dow Jones Industrial Average finished January with the steepest monthly declines since May 2012.

Investors found no solace from U.S. consumer spending data, which showed Americans spent more in December, but their incomes stagnated.

The S&P 500 (SPX) ended the session 11.60 points, or 0.7%, at 1,782.59, and recorded its third weekly decline in a row. The benchmark index lost 0.4% over the week and 3.6% over the month.

The Dow Jones Industrial Average (DJI) closed 149.76 points, or 0.9%, lower at 15,698.85. The blue-chip index, which suffered six triple-digit losses this month, ended the week 1.9% lower and recorded a 5.2% decline for January.

The Nasdaq Composite (RIXF) lost 19.25 points, or 0.5%, to 4,103.88. The tech-heavy index is down 0.6% over the week, its second-straight week of declines and 1.7% lower over the month. Read the recap of our stock market live blog.

Stocks endured heavy selling in most of the sessions this week, as sharp drops in emerging-markets currencies prompted nervous investors to flee riskier assets including stocks and lock in profits from a spectacular year.

"We can blame the recent pullback on the emerging markets or capital flows, but at the end of the day, it was going to happen anyway because markets rallied a bit too much at the end of last year," says Jim Russell, senior equity strategist for U.S. Bank Wealth Management.

"We would consider this as a buying opportunity. The jury is out on whether stocks will have a bigger correction, but for longer-term our outlook is positive," he added.

A batch of disappointing earnings before Friday's opening bell weighed on stocks.

Shares of Mattel(MAT) slid 12% after the toy maker reported a surprise fall in fourth-quarter sales due to sharp declines in core brands such as Barbie and Fisher-Price.

Wal-Mart Stores Inc (WMT) shares closed mostly flat even as the world's largest retailer cut its fourth-quarter earnings forecast. Wal-Mart warned the sales impact from the reduction in the U.S. government food stamps was greater than expected.

Amazon.com(AMZN) dropped 11% after sales came in just shy of estimates in its fourth-quarter earnings report released after the close on Thursday.

Chevron (CVX) shares fell 4.1% as the oil company reported lower profit and revenues than expected.

MasterCard Inc. (MA) shares slid 5.1% after the credit-card company missed Wall Street's expectations for its fourth-quarter profits.

One of the bright spots in the market was Zynga(ZNGA). Shares surged 23.6% after the games maker said it would cut its head count and buy NaturalMotion, a mobile videogame company, as it announced results late Thursday.

In economic news, data were fairly mixed. Consumer spending rose sharply in December for the second month in a row, but Americans had to dip into their savings to pay for their purchases. The incomes of Americans, however, were unchanged in December and they fell after adjusting for taxes and inflation. Economists polled by MarketWatch had forecast a smaller gain in spending but a slight rise in income.

Consumer sentiment, however, declined in January, as weak jobs growth continuing to weigh on consumers, according to Friday reports on a gauge from the University of Michigan and Thomson Reuters.

The Chicago PMI fell in January to a still-strong 59.6 from 60.8 in December, but employment weakened for the second straight month. Economists polled by MarketWatch had expected the index, formally known the Chicago business barometer, to decline to 59.8. Readings above 50 indicate expansion.

In other markets, 10-year Treasurys extended a rally, oil fell while gold inched higher and the dollar held on to recent gains. European stocks fell. In Asia, Japanese stocks eased.

More must-reads from MarketWatch:

Strategists eye these S&P 500 levels

Emerging-markets turmoil set to buoy gold, sink oil

Bond-market short squeeze makes it cheaper to get a mortgage

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