NEW YORK Wall Street ended its worst week this year with a sharp selloff on Friday after a slowdown in job creation in the world's top economy raised the biggest question mark yet about the prospects for U.S. growth.
Employers reduced hiring for the third straight month, adding 115,000 workers in April, well below forecasts of 170,000. Traders' expectations had fallen during the week, but the softer jobs number missed even more pessimistic forecasts.
Energy shares were the worst performers, with the S&P energy index .GSPE down 2.2 percent on fears a worsening economy would sap demand. U.S. crude oil fell 4 percent, dropping below $100 a barrel for the first time since February. <O/R>
The sharp retreat this week was a blow to investors who had been hoping the S&P 500 would break out to new recovery highs. The index is now moving away from strong resistance at the 1,400 level after failing to make a convincing move above it.
"When we entered the second quarter, we thought it would be a consolidation/correction quarter for the market simply because it was overbought, over-believed, and we saw economies were not improving, and that is still the case," said Bruce Bittles, chief investment strategist of Robert W. Baird & Co in Nashville.
For the week, the S&P 500 lost 2.4 percent, its worst weekly performance since December.
Investors were also cautious ahead of elections in France and Greece over the weekend as European policymakers struggle to bring an end to their debt crisis and people rebel against the strain of austerity measures.
The utility sector index .GSPU, considered a defensive play, was the only S&P 500 sector in positive territory, up 0.2 percent. Shares of CenterPoint Energy (CNP.N) led, up 1.7 percent at $20.05.
The Dow Jones industrial average .DJI dropped 168.32 points, or 1.27 percent, to 13,038.27 at the close. The Standard & Poor's 500 Index .SPX lost 22.47 points, or 1.61 percent, to 1,369.10. The Nasdaq Composite .IXIC fell 67.96 points, or 2.25 percent, to 2,956.34.
The selloff came on the highest volume in two weeks. Around 7.02 billion shares were traded on the NYSE, the Nasdaq and the NYSE Amex, above the daily average of 6.76 billion. On the NYSE, decliners outnumbered advancers by a ratio of 3 to 1. On the Nasdaq, four stocks fell for every one that rose.
In the oil sector, Chevron Corp (CVX.N) dropped 2.1 percent to $103.72 while Exxon Mobil Corp (XOM.N) slipped 1.3 percent to $84.57. Both ranked among the Dow's top losers, along with other big names in economically sensitive sectors.
With this week's retreat, much of the S&P 500's gains from the move off the April closing low at 1,358.59 have been erased. The market has found support around that level in the past, but a breach there could take it back to 1,340.
Also dampening the mood on Friday, surveys showed the euro zone's economy worsened markedly in April and suggested a recession may be deeper than previously thought. The pan-European FTSEurofirst 300 index .FTEU3 slid 1.7 percent to close at 1,027.15. <.
"People were too optimistic about Europe. They felt the recession was going to be shallow and short, and I felt it would be deep and long, and that is still my posture," Bittles said.
Russian shares plunged 4 percent, wiping out this year's gains in the benchmark MICEX index, as demand for risk assets waned and oil prices hit the rouble currency.
The Russian stock market is the only one of the BRICs countries to be in the red for the year.
Among individual stocks, LinkedIn Corp (LNKD.N) jumped 7.2 percent to $117.30 after the social networking website raised its outlook and smashed revenue and profit expectations.
First Solar Inc (FSLR.O) fell 6.3 percent to $16.94 and was the biggest decliner in the Nasdaq 100 .NDX. The U.S. solar panel maker posted an unexpected quarterly loss on Thursday, prompting analysts to lower their price targets.
Estée Lauder Cos Inc (EL.N) dropped 5.3 percent to $60.72 after the company gave a profit forecast that disappointed Wall Street.
Of the 415 companies in the S&P 500 index reporting results, 67.5 percent have exceeded estimates, according to Thomson Reuters data through Friday morning. That is a sharp decline from the start of earnings season when more than 80 percent of companies were beating forecasts.
Dole Food Co Inc DOLE.N said it may spin off one or more units, sending its shares up 7.7 percent to $9.39.
(Editing by Jeffrey Benkoe, Dan Grebler and Jan Paschal)