U.S. stock markets hit new lows of the year Friday after the government released much worse-than-expected unemployment data and investors continued to fret over high oil prices.

The blue-chip Dow Jones industrial average ended lower 147.70 points, or 1.50 percent, to close at 9,815.33. The technology-laced Nasdaq lost 44.74 points, or 2.52 percent, to end at 1,776.89, while the broader Standard & Poor's 500 index was down 16.73 points, or 1.57 percent, to close at 1,063.97. It was the lowest close for all three indexes this year. The Dow last closed lower on Nov. 28, the Nasdaq on Aug. 26 and the S&P 500 on Dec. 10.

For the week, the Dow dropped 3.2 percent, the S&P 500 fell 3.4 percent and the Nasdaq plummeted 5.6 percent. It was the worst weekly performance for the Dow since the second week of March, and the worst week of the year for the other two indexes.

Early Friday the Labor Department reported nonfarm payrolls rose 32,000, and the U.S. unemployment rate fell to 5.5 percent from 5.6 percent in June.

The July job report reflects the weakest increase in hiring since December and comes after a revised gain of just 78,000 in June, even less than previously reported. Economists had forecast the creation of roughly 243,000 jobs for July.

Analysts said the weak employment data raised new doubts about what the Federal Reserve (search) board of governors will do next week when it meets to discuss interest rates. The Fed had widely been expected to raise rates by a quarter percentage point to 1.5 percent.

"This casts a huge shadow over consumer spending going forward. You got softer job growth and you got softer wage growth," said Jeffrey Saut, chief investment strategist for Raymond James Financial.

The jobs data temporarily overshadowed oil prices, which hit a record high on Thursday for the fifth consecutive trading session. But U.S. light crude futures on NYMEX were lower on Friday, slipping to $43.95.

Stocks most sensitive to swings in the economy fell on the employment news, with manufacturers 3M Co. (MMM) and Honeywell International Ltd. (HON) dragging the Dow lower. Honeywell shares were down $1.19 to $34.58, while 3M's stock lost $1.70 to $79.87.

The jobs report also hit employment services stocks hard, with Internet jobs search company Monster Worldwide Inc. (MNST) falling $2.18 to $17.93, while shares of Manpower Inc. (MAN), the world's second-largest staffing company, fell $2.27 to $39.73.

Shares of MCI. Inc. (MCIP), the No. 2 U.S. long-distance company, jumped $2.15 to $15.99 after it announced a quarterly dividend that was part of a plan to return $2.2 billion to shareholders.

Halliburton Co. (HAL ), which faces accusations of accounting fraud in a new lawsuit brought by investors, was down 44 cents at $29.67.

Shares of General Motors Corp. (GM) tumbled $1.05 to $41.49 following the company's announcement Thursday that it was recalling all Saturn Vue sport utility vehicles manufactured since 2001.

Declining issues outnumbered advancers by more than 2 to 1 on the New York Stock Exchange, where volume came to 1.51 billion shares, up from 1.39 billion shares traded on Thursday.

The Russell 2000 index of smaller companies was down 12.71, or 2.4 percent, at 519.65, also a new low for the year.

Overseas, Japan's Nikkei stock average fell 0.8 percent. In Europe, Britain's FTSE 100 closed down 1.7 percent, France's CAC-40 finished down 2.6 percent and Germany's DAX index was down 2.7 percent.

The Associated Press and Reuters contributed to this report.