U.S. stocks fell Friday as investors fretted that a stronger-than-expected March job growth report will give the Federal Reserve more ammunition to push interest rates higher, overshadowing hopes for robust corporate profits.

The Dow Jones industrial average fell 96.46 points, or 0.86 percent, to 11,120.04. The Standard & Poor's 500 Index was down 13.54 points, or 1.03 percent, at 1,295.50. The Nasdaq Composite Index was down 22.15 points, or 0.94 percent, at 2,339.02.

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A drop in oil prices also hurt shares of major oil companies, including blue-chip Exxon Mobil (XOM) Corp.

The stock market's decline was accompanied by heavy losses in the bond market and investors sold shares of banks, real estate investment trusts and insurers, such as American International Group Inc. (AIG), which can be more sensitive to higher interest rates.

The data bolstered traders' belief that the Fed will raise its benchmark lending rate by at least another quarter-percentage point from 4.75 percent, said Jonathan Golub, U.S. equity strategist at JPMorgan Asset Management.

"If you were in the camp of people who were praying for the Fed to stop, you probably need to pray a little harder," Golub said.

Fed funds futures showed late Friday that there's a 60 percent chance that the Fed will raise the fed funds rate to 5.25 percent by June.

Major stock indexes suffered their biggest one-day declines in over a month and erased most of the gains made earlier in the week. The sell-off pushed the Standard & Poor's 500 index below a key technical support level of 1,305.

For the week, the Dow industrials gained 0.1 percent, while the S&P 500 inched up 0.05 percent, and the Nasdaq dipped 0.03 percent.

U.S. employers added 211,000 nonfarm jobs in March, the Labor Department said, exceeding economists' estimate for growth of 190,000 jobs. The unemployment rate fell unexpectedly in March to 4.7 percent, a 4 1/2-year low, from February's 4.8 percent.

"We want the economy to be strong, but we don't want it to be too strong because we want the Fed to come to the end of their rate-hiking cycle," said Evan Olsen, head of equity trading at Stephens Inc.

The yield on the benchmark 10-year Treasury note jumped to 4.99 percent, its highest since June 2002, on perceptions the Fed would raise rates more than had been previously expected. With yields at that level, bonds also can pose more competition to stocks, which also hurt the market.

The stock of AIG, the world's largest insurer by market value, dropped 1.6 percent, or $1.06, to $64.38 and was the biggest drag on the Dow. Shares of J.P. Morgan Chase & Co. lost 1.4 percent, or 59 cents, to $41.70. The Morgan Stanley U.S. Real Estate Investment Trust Index fell 1.5 percent to its lowest level in a month.


Crude oil futures for May delivery dropped almost 1 percent, or 55 cents, to $67.39 a barrel on hopes that lost Nigerian output would be restored. That, in turn, pushed shares of oil companies lower.

Exxon, the world's largest publicly traded oil company, fell 1.2 percent, or 76 cents, to $61.33. ConocoPhillips (COP) shares shed 1.9 percent, or $1.29, to $65.96 on the NYSE.

On Nasdaq, shares of Starbucks Corp. (SBUX) hit a record high, a day after the company posted better-than-expected growth in March same-store sales. The stock gained 1.1 percent, or 41 cents, to close at $37.86 after hitting a high of $38.96 during the session.

Shares of Alcoa Inc. (AA), the world's largest aluminum producer, rose 1.1 percent, or 34 cents, to $32.50 on optimism about its quarterly earnings report Monday.

But shares of Apple Computer Inc. (AAPL), weighed on the Nasdaq, falling 2 percent, or $1.45, to $69.79 after Banc of America Securities cut its price target on the stock.

Research In Motion Ltd.'s shares fell 5.5 percent, or $4.60, to $79.78, a day after the maker of the Blackberry wireless e-mail device forecast a shortfall in first-quarter results and subscriber growth.

Trading was fairly active on the New York Stock Exchange, where about 1.53 billion shares changed hands, just below last year's daily average of 1.61 billion daily average.

On the NYSE, decliners outnumbered advancers by a ratio of about 5 to 1.

On Nasdaq, about two stocks fell for every one that rose, with about 2.04 billion shares traded, above last year's daily average of 1.8 billion.

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