NEW YORK – A surprisingly weak report on the labor market in August kept a lid on stocks Friday, and technology stocks were unable to hold onto gains won earlier in the day on a bullish forecast from semiconductor heavyweight Intel (INTC).
The blue-chip Dow Jones industrial average (search) dropped 84.56 points, or 0.88 percent, to 9,503.34. The broader Standard & Poor's 500 Index (search) fell 6.6 points, or 0.64 percent, to 1,021.37. The technology-laced Nasdaq Composite Index (search) was down 10.85 points, or 0.58 percent, at 1,858.12.
The government said that employers cut jobs in August at the fastest pace since March. The number of workers on U.S. payrolls outside the farm sector slid 93,000 in August, the seventh straight month of declines. The number was far worse than the 12,000 increase expected by economists. The unemployment rate fell, but only to 6.1 percent from 6.2 percent in July.
"These numbers are very disappointing, extremely weak," said Kathleen Stephansen, director of global economics at Credit Suisse First Boston. "It's saying that essentially the labor market continues to lag sorely behind the other numbers. The missing link in this recovery/expansion remains the labor market."
The Nasdaq snapped a string of seven up sessions. The S&P 500 fell after notching gains in the previous eight and the Dow fell after rising in the previous five sessions.
Despite their drops for the day, the Nasdaq and the S&P 500 both had a fourth straight week of gains, while the Dow racked up its fifth.
"It looks like somebody out there put out an asset allocation trade," said Tom Schrader, managing director of U.S. equity trading at Legg Mason Wood Walker. "We're estimating it be a little more than a billion dollars and it looks like they were selling equities and buying bonds. That's what caused the massive dislocation in both the equity market and the jump in the bond market."
Intel, the world's largest maker of semiconductors, ended 11 cents higher at $28.71. Earlier, Intel had helped underpin the market, then dipped into negative ground before recovering. The Nasdaq giant and Dow component said that quarterly revenues would land at the high end of its prior target.
Wal-Mart Stores Inc. (WMT), the world's largest retailer, fell $1.19, or about 2 percent, to $58.89. Banc of America Securities cut the company to neutral from buy, saying "with the stock rapidly approaching our $62 target, we don't see enough reason to maintain a buy rating on the stock."
Shares of Boeing Co. (BA) fell after Senate Armed Services Committee Chairman John Warner moved Thursday to slash a controversial U.S. Air Force plan to lease and then buy 100 Boeing 767s for $22.4 billion. Boeing shares fell 73 cents, or 1.9 percent, to $37.16.
Shares of used car dealer CarMax Inc. (KMX) dropped after it said new stores cut into sales at existing stores. CarMax fell $2.30, or 6.1 percent, to $35.44.
Procter & Gamble Co. (PG) fell 45 cents to $90.98, having climbed $2.63 on Thursday when it said it third-quarter earnings would beat analysts' expectations.
Volume was active with 1.44 billion shares traded on the New York Stock Exchange and 1.94 billion changing hands on the Nasdaq. Decliners outnumbered advancers about 6 to 5 on the NYSE and 9 to 7 on the Nasdaq.
The Russell 2000 index, the barometer of smaller company stocks, fell 3.69, or 0.7 percent, to 508.87.
Overseas, Japan's Nikkei stock average finished Friday up 0.04 percent. In Europe, France's CAC-40 fell 0.5 percent, Britain's FTSE 100 rose 0.2 percent and Germany's DAX index lost 1.7 percent.
Reuters and the Associated Press contributed to this report.