Stocks finished deeply in negative territory Friday, after the government reported that hiring slowed in April, fueling worries over the strength of the economic recovery.
The S&P 500 and Nasdaq posted their biggest weekly drop this year.
The Dow Jones Industrial Average fell for a third-consecutive session, tumbling 168.32, or 1.27 percent, to close at 13,038.27, led by BofA and Cisco .
The S&P 500 fell 22.47, or 1.61 percent, to finish at 1,369.10. The Nasdaq plunged 67.96, or 2.25 percent, to end at 2,956.34.
The CBOE Volatility Index, widely considered the best gauge of fear in the market, surged to close near 19.
For the week, the Dow erased 1.44 percent, the S&P 500 shed 2.44 percent, and the Nasdaq dropped 3.68 percent. BofA was the biggest laggard on the Dow for the week, while Merck gained.
Nine out of the ten key S&P sectors ended lower, led by techs, while telecoms eked out a small gain.
Non-farm payrolls rose much less than expected , with employers adding just 115,000 jobs in April, well below expectations for 170,000 according to a Reuters survey. Still, the unemployment rate slipped to 8.1 percent, hitting the lowest since January 2009.
“It’s crystal clear that the economic recovery is in doubt—you have an economy that is in need of organic growth and you’re not getting it from these reports,” said Todd Schoenberger, managing principal at The BlackBay Group. “Participation rate dropped and average working hours are down—if you’re lucky enough to have a job, your spending power is still down.”
Oil prices dropped sharply to settle near $98 a barrel , pressured by the jobs report. Southwestern Energy was the biggest laggard in the sector after the firm posted disappointing earnings.
Despite the disappointing report, traders say the jobs number was not weak enough to force the Fed's hand on a new round of stimulus, which has been a positive catalyst for stocks.
"Stock market bulls should be forewarned: The bottom-line from this report is that the momentum in the labor market is slowing, but not enough to bring the Fed off the sidelines for an additional round of asset purchases," according to a BofA Merrill Lynch research note.
Apple dragged on the Nasdaq as the iPad maker fell below its 50-day moving average of $585 a share. The iPad maker has slumped nearly 6 percent for the week, and almost 12 percent from its all-time high of $644 a share.
Among earnings, LinkedIn surged after the business-related social networking site reported better-than-expected revenue and profit. In addition, at least six brokerages raised their price target on the firm.
Kraft Foods posted results that edged above Wall Street estimates , reaffirmed its full-year growth targets and said it was on track with plans to split into two companies later this year. Stifel raised its price target on the stock to $44 from $42.
Fellow Dow component Bank of America said in a quarterly filing that it would have been required to post $5.1 billion in collateral under derivatives contracts as of March 31 if major ratings agencies had downgraded its debt by two notches. JPMorgan declined after CLSA's Mike Mayo cut his rating on the bank to "underperform" from "outperform."
Bailed-out insurer AIG said quarterly profit more than doubled from a year earlier, exceeding expectations with the help of investment gains.
Toy maker LeapFrog Enterprises posted strong quarterly results, helped by strong demand for its LeapPad learning tablet.
Berkshire Hathaway is slated to post earnings after-the-bell Friday.
Of the 415 S&P 500 companies that have posted earnings so far, nearly 67 percent have topped Wall Street estimates, while almost 24 percent have missed.
Netflix slumped after fluctuating in a wide range all day. Shares of the online-movie streaming site have plunged almost 30 percent over the past two weeks, but hedge fund manager Whitney Tilson of T2 Partners told CNBC he's been " buying steadily as it's fallen ," adding that the firm is "back to being a very interesting acquisition target ."
UPS approved a new $5 billion share buyback program and said it expects to use about $5 billion in cash and to issue about $1.8 billion in new debt to fund its purchase of TNT Express.
Meanwhile, fruit and fresh vegetable distributor Dole Food may spin off one or more of its units as the company initiated a strategic business review of its business.
Tilly's jumped in its market debut after the clothing retailer priced its IPO at $15.50 a share.
European shares drifted lower , ahead the French and Greek elections .
—Follow JeeYeon Park on Twitter: @JeeYeonParkCNBC —
On Tap Next Week:
MONDAY: Consumer credit, Facebook IPO roadshow begins; Earnings from Tyson Foods, Electronic Arts TUESDAY: NFIB small biz index, 3-yr note auction, McDonald's April sales, Fed's Fisher speaks; Earnings from DirecTV, Discovery Comm, HSBC, Wendy's, Disney WEDNESDAY: Weekly mortgage apps, wholesale trade, oil inventories, 10-yr note auction, BofA shareholders mtg, Fed's Kocherlakota speaks, Fed's Pianalto speaks, Fed's Plosser speaks; Earnings from Toyota, AOL, Dean Foods, Macy's, Cisco, Activision Blizzard, NewsCorp, Priceline.com THURSDAY: International trade, jobless claims, import & export prices, 30-yr bond auction, Ford shareholders mtg, Fed Chairman Bernanke speaks, Fed's Evans speaks, Fed's Kocherlakota speaks; Earnings from ArcelorMittal, Kohl's, Sony, Nordstrom FRIDAY: Producer price index, consumer sentiment; Earnings from Nissan, Nvidia
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