NEW YORK (CNNMoney.com) - Stocks slumped Friday, falling for the second session, as investors eyed Amazon.com's disappointing results, higher oil prices and inflationary signs in the January jobs report.

Stocks slumped for the week as well.

The Nasdaq composite (down 18.99 to 2,262.58, Charts) sank about 0.8 percent, due to steep declines in Internet and semiconductor stocks.

The Standard & Poor's 500 index (down 6.81 to 1,264.03, Charts) and the Dow Jones industrial average (down 58.36 to 10,793.62, Charts) both lost about 0.5 percent.

The three major gauges had spent most of the session in negative territory, with an attempt made at midday to climb back.

However stocks ultimately closed lower as worries about inflation proved too strong. The worries were sparked by a jump in oil prices back above $65 a barrel and aspects of the otherwise upbeat January jobs report.

Disappointing earnings from Amazon.com added to the woes for the tech sector.

"I think the market very much revolves around oil, which backed off a bit this week, but remains over $65 a barrel," said Stephen Leeb, president at Leeb Capital Management. "Higher oil is a double whammy for the market, slowing the economy and increasing inflation."

Inflationary worries were amplified by the January jobs report, he said. The report showed a decline in unemployment and a rise in wages, the combination of which played into recent worries about wage inflation being the next big cause of pricing pressure, following energy prices.

U.S. light crude oil for March delivery jumped 69 cents Friday to settle at $65.37 a barrel on the New York Mercantile Exchange.

The unemployment rate fell to 4.7 percent in January, the government reported. It was the lowest rate since July 2001 and lower than what Wall Street economists expected.

The payrolls report, generated by a separate survey, showed that employers added 193,000 jobs in January, up from the previous month, but short of forecasts.

Average hourly wages rose more than expected, and the reading on wages in December was revised higher.

"I think the report was quite strong and will ultimately be positive for stocks," said Stuart Hoffman, chief economist at PNC Financial Services Group, noting a big upward revision to job growth in November and December on top of the gains in January.

However, the negative reaction was due to "worries that if wages are rising and unemployment is down, the Fed will react," Hoffman said. "The Fed said that they are watching resource utilization, and people are a resource."

Separate reports showed that consumer sentiment dipped more than expected in January and that growth in the U.S. service sector posted a surprising slowdown last month.

Amazon.com (down $4.41 to $38.33, Research) slumped over 10 percent and dragged on other Web stocks after reporting quarterly results late Thursday that missed Wall Street's sales estimates. The online retailer's earnings edged past forecasts.

Amazon weighed on Yahoo! (down $0.71 to $33.54, Research) and other web stocks, lowering the Goldman Sachs Internet (Charts) index by 2.4 percent.

Amazon is the latest widely-held technology company to offer earnings or a forecast that is short of bullish expectations, following Google (down $14.49 to $381.56, Research), Yahoo! (down $0.71 to $33.54, Research) and others.

Blue chips turned lower again, after trying to recover at midday.

General Motors (down $0.45 to $23.15, Research), IBM (down $1.26 to $79.97, Research) and Wal-Mart Stores (down $0.79 to $45.49, Research) led the Dow 30 lower.

Component Honeywell (up $0.70 to $39.23, Research) gained after Citigroup upgraded it to "buy" from "hold."

Other Dow gainers included McDonald's (up $0.52 to $35.97, Research) and Merck (up $0.57 to $34.39, Research), both of which slipped in Thursday's broad selloff.

Telecom, oil and retail stocks also fell.

Among other movers, Gateway (down $0.36 to $2.42, Research) plunged 13 percent after reporting quarterly revenue late Thursday that rose from a year ago but missed forecasts. The personal computer maker also reported quarterly earnings rose, topping forecasts.

Among other movers, biotech OccuLogix (down $8.65 to $4.10, Research) plunged almost 68 percent in unusually active Nasdaq trade after a late-stage study of its treatment for age-related blindness didn't produce the anticipated results.

Treasury prices bounced back after falling in the morning on the report, pushing the 10-year note yield to about 4.52 percent from 4.56 late Thursday. Treasury prices and yields move in opposite directions.

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

COMEX gold for April delivery fell $5.10 to settle at $567.40 an ounce.

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