Stocks plunged in early trading while bonds surged higher Friday after the government reported payrolls in August fell for the first time in four years rather than rising as had been expected. The Dow Jones industrial average fell more than 150 points.

Wall Street were unpleasantly surprised by the Labor Department's report that payrolls fell by 4,000 in August, the first decline since August 2003, while the unemployment rate held steady at 4.6 percent as expected.

Traders has been awaiting the report as it tries to determine how well the economy is holding up under the weight of a faltering housing market, a rise in mortgage defaults and tightening availability of credit. While the report is backward looking and not predictive, investors regard it as an important reading of the economy's health.

In the first minutes of trading, the Dow fell 151.77, or 1.14 percent, to 13,211.58.

Broader stock indicators also fell. The Standard & Poor's 500 index fell 18.72, or 1.27 perecent, to 1,459.83, and the Nasdaq composite index fell 39.17, or 1.50 percent, to 2,575.15.

Bonds, meanwhile, rose sharply following the jobs report as investors sought safety. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, fell to 4.42 percent from 4.51 percent late Thursday.

The dollar fell sharply following the employment report and as the likelihood of an interest rate cut appeared to increase. Dollar-based assets would earn less interest if the Fed were to cut rates. In addition, gold prices rose because some investors would be expected to abandon a weakening dollar and move into gold if the central bank cuts rates.