NEW YORK - US stocks plunged Friday after data showed the weakest job creation since 2003 and a rise in unemployment, fueling recession fears.
The Dow Jones Industrial Average tumbled 266.71 points (2.04 percent) to 12,790.01 just after the market close and the tech-heavy Nasdaq composite shed 98.03 points (3.77 percent) to 2,504.65.
The broad-market Standard & Poor's 500 index lost 35.97 points (2.49 percent) at 1,411.19, according to preliminary closing figures.
Investors were rattled after the Labor Department said the US economy gained a mere 18,000 nonfarm jobs in December as the unemployment rate rose to 5.0 percent, the highest reading in more than two years.
The report overturned market expectations of a 70,000 jobs increase and a 4.8 percent jobless rate, up from 4.7 percent in November.
Some analysts said the surprisingly weak report could lead the Federal Reserve to lower interest rates again, after a combined one percentage point reduction since September.
The sudden jolt on the labor front showed that economic troubles from a prolonged housing slump and related credit tightening are affecting consumers' potential spending power, which drives roughly two-thirds of US output.
"This news will increase concern that the US economy is headed into recession," said Al Goldman, chief market strategist at AG Edwards.
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01/04/2008 21:08 GMT