(Corrects to show Banco Bilbao Vizcaya Argentaria is Spanish, not Argentine, in paragraph 13; adds background to paragraph 14)
* S&P 500 on track for second straight weekly decline
* Procter & Gamble leads the Dow's gainers after results
* Dow down 1.5 pct, S&P 500 off 1.6 pct, Nasdaq off 1.8 pct
By Caroline Valetkevitch
NEW YORK, Jan 24 (Reuters) - U.S. stocks dropped on Friday following a selloff in emerging market assets, growth concerns in China and expectations that the Federal Reserve will further cut stimulus.
Friday's slide put the S&P 500 on track for its worst drop since November 2012, pushing the index down 2.1 percent for the week. The benchmark index fell below its 50-day moving average for the first time since Dec. 18, a technical support level that could indicate more selling pressure if convincingly pierced.
Shares extended losses in afternoon trading, with the S&P 500 below 1,800.
"The market has broken some technical levels, and there's definitely some nervousness. The world is suffering from the emerging markets' flu," said Michael James, managing director of equity trading at Wedbush Securities in Los Angeles.
Among the 10 major S&P 500 sectors, industrials fared the worst, down 2.6 percent, as General Electric Co lost 2.7 percent to $25.13 and Boeing Co fell 2.8 percent to $137.37.
The Dow Jones industrial average fell 244.63 points or 1.51 percent, to 15,952.72, the S&P 500 lost 29.29 points or 1.6 percent, to 1,799.17 and the Nasdaq Composite dropped 74.639 points or 1.77 percent, to 4,144.236.
In a signal that the selling may be overextended, investors were willing to pay more for protection against a drop in the S&P 500 today than three months down the road.
The last time the spread between the CBOE volatility index and three-month VIX futures turned negative was mid-October, shortly after a 4.8 percent pullback in the S&P 500 opened the door to the last leg of the 2013 market rally.
A rout in emerging market assets spread to developed countries in Europe on worries about slowing growth in China, political problems in Turkey, Argentina and Ukraine, as well as about Fed policy.
With many market participants expecting the Fed to decide next week to shave its stimulus by another $10 billion a month, investors will look to less risky assets such as U.S. bonds on expectations that interest rates will begin to rise. Fed policymakers will conclude a two-day meeting on Wednesday.
Worries over China's growth surfaced after a disappointing manufacturing number spurred the S&P 500 to a 0.9 percent drop on Thursday.
The Turkish lira hit a record low and the South African rand fell to five-year low against the dollar.
U.S.-listed shares of Banco Bilbao Vizcaya Argentaria, S.A. tumbled 5.3 percent to $12.01.
Shares of the Spanish bank with heavy exposure to Latin America fell a day after Argentina's peso currency marked its steepest daily decline in 12 years, prompting Argentina's government to loosen strict foreign-exchange controls.
Argentina's government said Friday it would relax stringent foreign-exchange controls, after it abandoned its long-standing policy of intervening to support the peso currency. That resulted in the currency's steepest plunge since the 2002 financial crisis.
Going against the day's downdraft was Procter & Gamble Co , which advanced 2.5 percent to $80.19 and led the Dow's gainers. The world's largest household products maker reported lower quarterly profit, but kept its 2014 sales forecast unchanged.
(Additional reporting by Chuck Mikolajczak; Editing by Bernadette Baum, Nick Zieminski and Jan Paschal)