Stocks fell sharply Friday as economic data showing labor market weakness and less-than-expected growth in the services sector combined with downbeat earnings to sour Wall Street's mood.  

The Dow Jones industrial average lost 85.24 points, or 0.84 percent, at 10,006.63, falling a day after it chalked up the first three-day winning streak since mid-March. The technology-laced Nasdaq Composite Index was down 31.79 points, or 1.93 percent, at 1,613.03, falling for seven of the past eight weeks.

The broader Standard & Poor's 500 Index dropped 11.13 points, or 1.03 percent, at 1,073.43.

For the week, the Nasdaq was down 3 percent, the S&P 500 dropped 0.3 percent, and the Dow gained 1 percent.

"The fear is that the wave of economic growth is behind us," said Chris Wolfe, U.S. equity strategist for J.P. Morgan Private Bank, which oversees $274 billion. "Investors are seriously reconsidering their expectations for growth."

Semiconductor and telecommunications stocks led declines as companies, including chip maker Amkor Technology Inc., reported slack results. Investors worry business spending on new technology will remain weak in the uncertain economic enmpany can do is cut capital spending, so (the firms) that rely on that spending are in trouble," said Stephen Bliss, co-head of Nasdaq trading for Cantor Fitzgerald.

The unemployment rate shot up to its highest in almost eight years during April, the government said in a report that was latest sign the Federal Reserve likely would not raise rates when it meets next week, fearing it could choke the nascent recovery in the world's largest economy.

"It's a little bit of a disappointment in the numbers. Total unemployment at 6 percent that was worse than expected," said Peter Cardillo, chief strategist at Global Partners Securities Inc. in New York. "However, the employment report reassures the market that the Federal Reserve will not do anything when it meets next Tuesday."

The economy gained 43,000 new jobs in April while Wall Street economists had forecast that 41,000 jobs would be created in April and that the unemployment rate would nudge up to 5.8 percent

Adding to the pressure, the Institute of Supply Management (ISM) issued shortly after the open its survey of the huge U.S. services sector for April. The non-manufacturing index came in at 55.30, down from 57.30 in the prior month. A reading above 50 indicates expansion in the sector that includes everything from transportation to legal and financial services. Still, the latest reading was weaker than expectations of 56.70.

"The market is very volatile and in a glass-half-empty, not a glass-half-full mode," said Michael Kayes, chief investment officer of Eastover Capital Management, which manages $300 million. "We think the worst in corporate profits is over, and we will have gradual improvement. But the market is not paying for that right now."

Sapient Corp. (SAPE) sank $1.80, or 39 percent, to $2.81, after the tech consulting company reported a wider net loss than a year earlier and said sales would fall more in the current quarter because corporate spending on technology has fallen.

Amkor (AMKR)  was another firm to be hit by worries capital spending remains sluggish. Shares lost $2.18, or 11.2 percent, to $17.26 after Amkor posted a loss that was wider than the year-earlier quarter, citing weak demand for chips.

WorldCom Inc. (WCOM) was the most-active Nasdaq stock and slumped 24 cents, or 11.8 percent, to $1.79, on fears problems at the No. 2 U.S. distance telephone and data services company may intensify if new management fails to quickly cut expenses, pare debt and stave off a cash crunch.

WorldCom's Chief Executive Bernie Ebbers quit earlier this week and was replaced by Vice Chairman John Sidgmore.

Oracle Corp. (ORCL) lost 12 cents to $8.43 and was among stocks leading the decline on the Nasdaq. Investment firm Goldman Sachs cut its estimates on the world's No. 2 software maker following the "slower tone of business shown by other tech companies in the March quarter."

Shares of wireless equipment firms fell after Vodafone Group Plc (VOD), Europe's largest wireless operator, cut its outlook. Qualcomm Inc. (QCOM) fell $1.59 to $26.84, while the world's No. 2 cellphone maker Motorola Inc. (MOT) fell 46 cents to $14.89. The U.S.-traded shares of Vodafone fell $1.96 to $13.91.

In the positive column were "safe-haven" areas such as gold, which investors flock to in times of uncertainty. Gold rallied to its highest price in more than two years after the jump in the U.S. jobless rate, which rocked the dollar.

The American Stock Exchange gold bugs index rose 3.14 percent on gains by firms such as ASA Ltd. (ASA), up $1.42 to $33.72.

The April unemployment rate shot up to 6 percent, its highest level in more than 7-1/2 years, the government said. However, the report was the latest sign the Federal Reserve likely would not raise interest rates when it meets next week, fearing it could choke the nascent recovery in the world's largest economy.

Adding to pressure, the Institute of Supply Management's survey of the huge U.S. services sector showed the non-manufacturing index came in at 55.3 for April, down from 57.3 in March. A reading above 50 indicates expansion in the sector that includes everything from transportation to financial services. The reading was weaker than expectations of 56.7.

"Overall, the data looks weak and that has investors somewhat worried," said Joe Stocke, portfolio manager with StoneRidge Investment Partners. "The worry is there will be slower economic growth than anticipated."

The first-quarter earnings season has pretty much wrapped up, with 432 of the S&P 500 companies reporting. About 60 percent of all companies so far have beaten Wall Street consensus forecasts, while about 16 percent have missed forecasts, according to Thomson Financial/First Call. The rest were in line with forecasts.

On the whole, analysts expect profits to have dropped 11.5 percent from the same quarter a year ago.

Resistance -- the point where sellers are likely to emerge -- is at 1,085 for the S&P 500, 10,125 for the Dow average and 1,640 for the Nasdaq, according to research firm Schaeffersresearch.com.

Support -- where buyers are expected to swoop in -- is at 1,063 for the S&P 500, 9,825 for the Down and 1,560 for the Nasdaq. The levels are key elements of technical analysis, which studies prices, volume and charts to determine the potentially most opportune time to buy or sell.

Declining issues were even with advancers on the New York Stock Exchange where volume was moderate at 1.28 billion shares, down from Thursday's 1.35 billion.

The Russell 2000 index, the barometer of smaller company stocks, fell 1.05, or 0.2 percent, to 512.32.

In Europe, Britain's FT-SE 100 closed up 0.6 percent, while France's CAC-40 lost 1.5 percent and Germany's DAX index fell 1.7 percent.

Japan's financial markets were closed Friday for a national holiday. The markets will also close Monday for another national holiday and reopen Tuesday.

Reuters and the Associated Press contributed to this report.