Stocks fell Friday after a manufacturing report fanned fears of inflation while a rally in crude oil prices stirred worry about the effect of high energy costs on corporations and consumers.

The Dow Jones industrial averagewas down 99.46 points, or 0.95 percent, to end at 10,404.30. The Standard & Poor's 500 Indexwas down 7.67 points, or 0.65 percent, to close at 1,172.92. The technology-laced Nasdaq Composite Index was down 14.42 points, or 0.72 percent, to finish at 1,984.81.

For the week, the Dow closed down 0.37 percent, while the Nasdaq ended down 0.31 percent, and the S&P 500 finished up 0.13 percent.

"All the fears that were out there during the month of March, such as higher rates, inflation and higher oil, all came to the surface," said Larry Peruzzi, senior equity trader at The Boston Co. Asset Management, a Mellon subsidiary.

The early release of the Institute for Supply Management's (search) service sector index, which wasn't due until Tuesday, showed greater-than-expected growth in non-manufacturing businesses — worrying skittish investors that inflation may yet take hold and prompt the Federal Reserve (search ) to push for potentially jarring interest rate hikes.

That announcement stole momentum from the Labor Department's (search) jobs report, which showed that only 110,000 new jobs were created in March, half of the 220,000 economists had expected. February's figure also was revised lower by 19,000 jobs. The nation's unemployment rate fell to 5.2 percent from 5.4 percent in February.

"We rallied nicely on the jobs report, but then we got a conflicting message from the ISM report. That report doesn't usually carry as much weight, but it hit the bond market hard, and that moved to stocks pretty quickly," said Brian Pears, head equity trader at Victory Capital Management in Cleveland. "In a market where we're really this nervous to begin with, it only takes a little bit to turn things around."

U.S. employers created only 110,000 new jobs in March, the smallest gain in eight months. The nonfarm payrolls number was barely half the 220,000 that Wall Street economists had forecast.

A sharp jump in oil prices also sapped investors' confidence. A barrel of light crude rose $1.87 to settle at $57.27 on the New York Mercantile Exchange (search). High oil prices weigh on equities because they hurt corporate profits and consumer spending.

The ISM services index (search) — mistakenly released alongside ISM's manufacturing report — came in at 63.1 for March, far more than the 59 reading expected on Wall Street and sharply higher from February's 59.8 reading. With the service sector such a strong part of the economy, investors feared that growth would lead to higher prices.

The ISM manufacturing index (search), which was initially thought to be much higher due to a snafu in press releases issued by ISM, pointed to modest activity. The index, which measures the strength of industrial activity, came in at 55.2, slightly better than the 54.9 reading economists expected but still down from 55.3 in February.

"We started off the day with an employment report which looked like it was a good report, with the unemployment rate dropping to 5.2 percent, but we didn't see much on the non-farm payrolls which the market liked," Peruzzi said.

"Then we had the ISM. Everyone focused in on the prices- paid component of the ISM, which was a huge upset and the market rolled over and really hasn't come back, and then oil piles on by rallying 3 percent today."

The final reading of the University of Michigan's (search ) March consumer sentiment index was 92.6. Economists forecast the index at 92.7 after 94.1 previously.

Discounter Wal-Mart Stores Inc. (WMT) fell 2.2 percent, or $1.12, to $48.99, while heavy equipment maker Caterpillar Inc. (CAT) dropped 1.4 percent, or $1.29, to $90.15.

Energy companies rose as oil prices soared. Exxon Mobil Corp. (XOM) climbed 1.6 percent, or 95 cents, to $60.55, while ChevronTexaco Corp. (CVX) rose 1.7 percent, or $1.00, to $59.31.

Among other stocks moving, Best Buy Co. Inc. (BBY), the top U.S. electronics retailer, forecast current-year profit below many analysts' estimates. Its stock fell 6.3 percent, or $3.41, to $50.60 on the NYSE.

Qwest Communications International Inc. (Q) slipped 6 cents to $3.64 as the telecommunications company made yet another attempt to break up Verizon Communications Inc.'s (VZ) takeover of MCI Inc. (MCIP). Qwest is now offering $8.94 billion for MCI, far more than the $7.51 billion in the Verizon offer, which MCI accepted earlier in the week. MCI added 39 cents to $25.29, while Verizon was down 31 cents at $35.19.

Shares of Google Inc. (GOOG) rose 0.6 percent to $181.55 after the company said it is doubling free storage to 2 gigabytes for its Gmail e-mail product shortly after Yahoo Inc. matched Google's original offer. Yahoo rose almost 2 percent to $34.54 on Nasdaq.

Regulators are expanding their probe into insurer American International Group Inc.'s (AIG) accounting and operations, according to The Wall Street Journal, looking at a wider swath of the company's insurance transactions. The Journal also reported that former Chairman Maurice "Hank" Greenberg stepped down after the New York attorney general threatened a criminal indictment against the company if Greenberg were still in charge. AIG fell $4.46 to $50.95.

Taser International Inc. (TASR) tumbled 13 percent, or $1.58, to $10.42 after the stun-gun maker warned of a revenue shortfall for the quarter due to negative publicity surrounding risks associated with its non-lethal weapons. The company said it is launching an education campaign.

Overall, trading was active, with 1.74 billion shares changing hands on the New York Stock Exchange, above the 1.46 billion daily average for last year. About 1.89 billion shares were traded on Nasdaq, above the 1.81 billion daily average last year.

Decliners outnumbered advancers on the New York Stock Exchange by about 3 to 2, according to the NYSE.

On the Nasdaq, decliners outnumbered advancers by about 2 to 1.

The Russell 2000 index of smaller companies was down 3.52, or 0.57 percent, at 611.55.

Overseas, Japan's Nikkei stock average rose 0.47 percent. Britain's FTSE 100 rose 0.4 percent, Germany's DAX index gained 0.57 percent, and France's CAC-40 climbed 0.3 percent.

Reuters and the Associated Press contributed to this report.