NEW YORK -- Stocks dropped sharply on Wall Street Friday after the government reported that U.S. employers added the fewest jobs in nine months in March and more people gave up looking for work. The report was worse than economists were expecting.
The Dow Jones industrial average fell 112 points to 14,494 as of 12:37 p.m. EDT. It was down as much as 171 points in the early going. It was the worst drop for the Dow since Feb. 25.
U.S. employers added just 88,000 jobs in March, according to the Labor Department's monthly survey. That's half the pace of the previous six months. It was a disappointment for markets following positive signs on housing and the job market over the winter.
The report, one of the most closely watched indicators of the economy, dented investors' confidence that the U.S. was poised for a sustained recovery. The stock market has surged this year, pushing the Dow to a record. The index closed at an all-time high on Tuesday and is still up 10 percent this year.
"Things are still looking decent, but there's no doubt that this was a bit of a disappointment," said Brad Sorensen, Charles Schwab's director of market and sector research. "We're watching to see: is this the start of another soft patch?"
In other trading, the Standard & Poor's 500 index fell 15 points, or 1 percent, to 1,545. Technology stocks fell the most of the 10 industry groups in the index, 1.5 percent. Among big decliners in tech stocks, Cisco Systems fell 53 cents, or 2.6 percent, to $20.51. Oracle dropped 40 cents, or 1.2 percent, to $31.97.
Investors were reducing their exposure to risk. The industry that bucked the downward trend in the market was utilities, which traded flat. The rich dividends and stable earnings provided by those companies make them attractive to investors who want to play it safe.
Energy companies were among the best performers on the S&P 500 as the price of natural gas rose 3.6 percent on supply concerns. The price of the fuel has risen 21 percent since the start of the year. Cabot Oil & Gas climbed $1.95 to $66.59 and WPX Energy gained 49 cents to $15.84.
Investors will shift their focus to earnings reports next week.
Alcoa, the first company in the Dow index to report earnings, will release its first-quarter financial results after the markets close Monday. Analysts expect profits for S&P 500 companies to rise 0.6 percent in the first quarter compared with the same period a year earlier, according to S&P Capital IQ. That compares with an increase of 7.7 percent in the fourth quarter of 2012.
The yield on the 10-year Treasury note, which moves inversely to its price, plunged from 1.76 percent to 1.70 percent, its lowest level since December. The benchmark rate has declined sharply over the last month, from 2.06 percent on March 11, as demand for low-risk assets increased amid mounting evidence that growth in the U.S. economy is slowing.
Matthew Coffina, an editor at Morningstar StockInvestor, said stocks are still a better investment than bonds over the next ten years since bonds will be vulnerable to any rise in inflation or interest rates. "We still have a strong preference for stocks," Coffina said.
The Nasdaq composite, which includes many technology companies, fell 37 points, or 1.2 percent, to 3,187. That's worse than the declines of 0.8 percent in the Dow and 0.9 percent in the S&P.
F5 Networks, a network equipment and service provider based in Seattle, plunged 19 percent, the most of any S&P stock, after slashing its profit and revenue forecast. The company said its contract bookings fell sharply, as did its business with the federal government. The stock lost $17.28 to $73.14.
The S&P 500 is down 1.5 percent for the week and is on track for its biggest weekly loss since Nov. 9, when stocks fell after the presidential election. Investors were worried that a divided government would fail to reach a budget agreement to avoid drastic tax hikes.