Stocks slump on jobs report

NEW YORK (CNNMoney.com) -- Stocks tumbled Friday morning after the government's monthly jobs report showed weaker-than-expected employment growth and a jump in the unemployment rate.

The Dow Jones industrial average (INDU) and the broader S&P 500 (INX) index both lost around 1 percent in the early going. The Nasdaq (COMPX) composite lost 1.6 percent.

Employers added 18,000 jobs to their payrolls last month, short of forecasts for 70,000 and down from a revised 115,000 in the previous month.

The unemployment rate, generated by a separate survey, rose to 5 percent, a more than two-year low, from 4.7 percent in the previous month. Economists thought it would rise to 4.8 percent.

Average hourly earnings, the report's inflation component, rose 0.4 percent after rising a revised 0.4 percent in the previous month. Economists thought wages would rise 0.3 percent.

Stocks have been volatile for months as investors have mulled the fallout from the housing and credit market crises and whether the economy is heading into recession.

A weakening labor market added to fears about the economic outlook.

Wall Street also considered the results from Thursday's Iowa caucuses, which kicked off the 2008 presidential election. Former Arkansas Gov. Mike Huckabee won on the Republican side and Sen. Barack Obama of Illinois won for the Democrats.

Stocks were mixed Thursday as a jump in factory orders helped temper concerns about inflation as oil and gold prices hit record highs.

U.S. light crude oil for February fell 88 cents to $98.30 a barrel on the New York Mercantile Exchange, after hitting a record trading high above $100 a barrel during Thursday's session.

COMEX gold for February delivery fell $3.10 to $866 an ounce, pulling back from an all-time high hit Wednesday.

Treasury prices rose, lowering the yield on the 10-year note to 3.85 percent from 3.89 percent late Thursday. Treasury prices and yields move in opposite directions.

In currency trading, the dollar slipped versus the yen and the euro.