A disappointing jobs report sent stocks falling Friday and gave the Dow Jones industrial average its longest losing streak since the worst days of the financial crisis.
The Dow dropped 46 points Friday for its seventh straight loss and its longest slide since October 2008. The Dow and other major indexes posted big losses for a second straight week.
The Dow dropped 4.51 percent for the week, the worst five-day percent performance leading up to July 4 since 1896 when it fell 6.21 percent.
Investors found new reason to worry that the economic recovery is losing momentum after the government said private employers added only 83,000 jobs last month, fewer than the 112,000 analysts had forecast.
Light trading ahead of the long Independence Day weekend brought choppy moves, particularly in the final hour. The Dow was essentially flat in the last five minutes before sliding just before the close.
Reports on jobs earlier in the week had diminished expectations for the latest and most important snapshot of the labor market. Payroll company ADP said private employment was weaker than expected, while the government said initial claims for unemployment benefits rose unexpectedly last week.
Investors are focused on business hiring because that makes up the bulk of the country's work force. Also, overall jobs numbers have been skewed in recent months by temporary census workers. With many of those jobs gone, it was again clear that businesses aren't adding to payrolls as quickly as most investors would like.
"The small businessman refuses to play here," said Linda Duessel, equity market strategist at Federated Investors in Pittsburgh. She said business leaders don't yet have the confidence to hire and are in some cases relying on temporary workers. The enduring jobs problems are raising concerns that the economy will begin sliding again. Many economists say that's unlikely but still a worry.
"We're going to need, as a market, something to make us believe that the double-dip scenario is wrong," Duessel said, referring to the possibility of a second recession. "A soft patch is normal."
She said earnings reports for the April-June quarter could boost sentiment if companies also give upbeat forecasts.
The government cut 225,000 census jobs in June. Overall, 125,000 workers lost their jobs last month, more than the drop of 110,000 analysts predicted. The unemployment rate did drop unexpectedly, sliding to 9.5 percent from 9.7 percent. Economists polled by Thomson Reuters had expected it to rise to 9.8 percent. However, the decrease came as some people gave up looking for work. That means they weren't counted among the unemployed.
The government also reported that factory orders fell in May for the first time in nine months. The 1.4 percent drop was the biggest since March 2009, when major stock indexes hit a 12-year low. The drop unnerved traders because manufacturing has been one of the strongest areas of the economy.
Pessimism has been growing since late April about the health of the global economy. Debt problems in Greece and other European countries gave way to concerns about the pace of the U.S. recovery. The Dow dropped 10 percent for the second quarter, which ended Wednesday, while the Standard & Poor's 500 index lost 11.9 percent.
"Clearly there is a loss of momentum," Bob Baur, chief global economist at Principal Global Investors, said about the recovery. He said the slide in stocks could hurt the economy by eroding confidence. Still, he said a double-dip is unlikely in part because incomes are ticking higher and consumers are slowly boosting spending. "We just don't see the typical things that start another recession," Baur said.
The Dow fell 46.05, or 0.5 percent, to 9,686.48, its lowest close since Oct. 5 2009. The Dow hasn't fallen for seven straight days since an eight-day loss that ended Oct. 10, 2008.
The Standard & Poor's 500 index fell 4.79, or 0.5 percent, to 1,022.58.
The Dow is now down 13.6 from its 2010 high of 11,205.03, while the S&P 500 is down 16 percent from its high of 1,217.28.
The Nasdaq composite index fell 9.57, or 0.5 percent, Friday to 2,091.79.
For the week, the Dow dropped 4.5 percent. The S&P 500 index lost 5 percent, while the Nasdaq dropped 5.9 percent.
The S&P 500's two-week drop is the worst since early May.
Demand for Treasurys weakened after spiking earlier in the week as investors sought a safe place for their money. The yield on the 10-year note, which moves opposite its price, rose to 2.98 percent from 2.95 percent late Thursday. Its yield is used as a benchmark for interest rates on some mortgages and other consumer loans.
Crude oil fell 81 cents to $72.14 per barrel on the New York Mercantile Exchange. Gold rose.
Daniel Penrod, senior industry analyst for the California Credit Union League, said some businesses are going to put off hiring until there is more certainty about the economy.
"I don't see business really taking huge risks right now to build when they don't think people are going to be walking through the door," Penrod said.
The coming week could bring more insight into the economy if companies begin to drop hints about their earnings and forecasts. U.S. markets are closed Monday in observance of Independence Day. Tuesday brings a report on services businesses, which make up the biggest chunk of the economy.
Three stocks fell for every two that rose on the New York Stock Exchange, where volume came to 1.1 billion shares, compared with 1.6 billion Thursday.
The Russell 2000 index of smaller companies fell 5.79, or 1 percent, to 598.97. The Russell dropped 7.2 percent for the week.
Britain's FTSE 100 rose 0.7 percent, Germany's DAX index fell 0.4 percent, and France's CAC-40 rose 0.3 percent. Japan's Nikkei stock average rose 0.1 percent.