U.S. stocks opened sharply lower Friday after the government said businesses added the fewest jobs in June in more than a year. The unemployment rate rose to 9.2 percent.
Employers created only 18,000 jobs last month, a fraction of what economists expected. The Labor Department also lowered its estimates for the number of jobs created in April and May.
The Standard & Poor's 500 index dropped 15 in morning trading, or 1.2 percent, to 1,338. That erased the index's gains from Thursday and left it flat for the week.
The Dow Jones industrial average fell 123 points, or 1 percent, to 12,597. The Nasdaq composite index fell 28, or 1 percent, to 2,844.
Hiring slumped in May due partly to high fuel prices and disruptions of industrial supplies because of the earthquake and tsunami disasters in Japan. Those problems now appear to be more persistent than many analysts had expected.
"There's just a lot more evidence than before that we're in an extended weak patch," said Brian Gendreau, market strategist for Cetera Financial Group. He said private economists will likely reduce their projections for overall economic growth this year.
Traders rushed to the relative safety of government bonds. The yield on the 10-year Treasury note fell to 3.04 percent from 3.19 percent just before the jobs report came out. Bond yields fall when demand for them increases.
Weak economic data this spring had pushed stocks near their lowest levels of the year two weeks ago. Markets recovered after signals that the economy was rebounding, and closed near their 2011 highs on Thursday. It now appears that those peaks, reached on April 29, will stand for the time being.
"The market was just coming to the conclusion that this weak patch was coming to an end," Gendreau said. He said the downward revisions to earlier months' jobs numbers might signal a longer-term negative trend.
U.S. companies will begin releasing first-quarter earnings reports next week, starting with aluminum maker Alcoa Inc. on Monday.
-- Associated Press