NEW YORK (CNN/Money) -
Stocks and bond prices tanked Friday, with investors bailing out of both markets before the weekend, amid a weak May job report and a 2.6 percent jump in crude oil prices.
The Dow Jones industrial average (down 92.52 to 10,460.97, Charts) lost around 0.9 percent and the broader Standard & Poor's 500 (down 8.27 to 1,196.02, Charts) index sank 0.7 percent.
The Nasdaq composite (down 26.37 to 2,071.43, Charts) tumbled nearly 1.3 percent, dragged down by Apple Computer and selling in other heavily weighted tech shares.
For the week, the Dow lost more than 80 points, while the S&P 500 and Nasdaq both edged lower. The Dow and S&P 500 had gained for the previous two weeks and the Nasdaq for the previous four.
"The market needs to walk a line between too little growth and too much growth, between profits and interest rates," said James Awad, chairman at Awad Asset Management. "The jobs report tilted the market toward too little growth."
He said that this tilting also coincided with some end-of-week selling, as well as profit-taking in the Treasury market.
Employers added 78,000 to payrolls in May, the weakest in two years and well below economists' forecasts. Employers added 274,000 jobs in April.
The May unemployment rate, generated by a separate survey, fell to 5.1 percent from 5.2 percent in April. But the drop may not be a positive, analysts said, as it could be related to some workers running out of jobless benefits.
With weakness in May after April's strength, the labor market has been looking choppy this year, said Joshua Shapiro, chief U.S. economist at Maria Fiorini Ramirez Inc.
"Businesses are trying to keep costs as low as possible, but after cutting their work forces to the bone, they're forced to hire some," he said, adding that this dilemma partly explains the erratic numbers.
Initially, investors took the jobs report with a grain of salt -- betting that slower growth means the Federal Reserve can slow its interest-rate hiking campaign. But the tone soon turned negative, and a weak reading on the service sector and a jump in oil added to the selling pressure.
Treasury bonds initially rallied on the jobs news, driving the 10-year yield as low as 3.81 percent at one point. However, bonds reversed course and fell in late morning, remaining lower through the session.
Some 28 of 30 Dow blue chips fell, led by Alcoa (down $0.45 to $27.32, Research), IBM (down $1.56 to $75.79, Research), McDonald's (down $0.61 to $30.51, Research) and Wal-Mart Stores (down $0.87 to $47.35, Research).
Among other active issues, Apple Computer (down $1.80 to $38.24, Research) slid 4.5 percent in active Nasdaq trade on an Internet report, unconfirmed by Apple, that there's a surplus inventory of its popular iPod shuffle. Separately, Apple agreed to settle a class-action lawsuit with consumers who had battery problems with older versions of iPod.
Cognos (down $2.81 to $34.40, Research), a maker of business reporting software, sank 7.5 percent after warning that first-quarter sales and earnings would miss previous forecasts, due to late closings of several big deals.
The software sector overall was quite weak, with the Goldman Sachs Software (Charts) index losing 1.2 percent.
Google (down $7.64 to $280.26, Research) and eBay (down $1.25 to $37.80, Research) led the list of Internet stocks declining. The Goldman Sachs Internet (Charts) index lost 1.2 percent.
Among other movers, Build-a-Bear Workshop (down $5.79 to $22.11, Research), which sells custom-made stuffed animals, slumped 20.8 percent after warning that fiscal second-quarter and full year results will miss forecasts.
In the day's deals, L-3 Communications Holdings (up $3.12 to $74.15, Research) said it would buy fellow defense technology contractor Titan (down $0.32 to $22.47, Research) for around $2 billion in cash. L-3 shares gained on the deal, but Titan fell, with the deal only representing a modest premium over Titan's closing stock price Thursday.
Market breadth was negative. On the New York Stock Exchange, losers beat winners nine to seven on volume of 1.28 billion shares. On the Nasdaq, decliners topped advancers three to two as 1.67 billion shares changed hands.
The Institute for Supply Management said its services index fell to 58.5 in May from 61.7 in April, missing forecasts for a drop to just 60. The report was released around 30 minutes after the start of trading.
Treasury prices fell, raising the 10-year note to 3.97 percent from 3.89 percent late Thursday. Prices and yields move in opposite directions.
In currency trading, the dollar gained against the euro and fell versus the yen.
U.S. light crude for July delivery rose $1.40 to settle at $55.03 a barrel on the New York Mercantile Exchange.
COMEX gold added $1 to settle at $425.80 an ounce.