Stocks fell sharply Friday after the release of a dismal report on job creation in the United States. The Dow Jones industrial average dropped more than 200 points, erasing what was left of its gain for the year.
The Standard & Poor's 500 index and Nasdaq composite index both fell more than 1.5 percent in early trading.
American employers added just 69,000 jobs in May, the fewest in a year, and the unemployment rate ticked up to 8.2 percent from 8.1 percent. Economists had forecast a gain of 158,000 jobs.
A little more than an hour into trading, the Dow was down 215 points at 12,178, leaving it with a loss of 0.3 percent for the year. Earlier this year, the Dow was up more than 8 percent.
"The big worry now is that this economic slowdown is widening and accelerating," said Sam Stovall, chief equity strategist at S&P Capital IQ, a market research firm.
The weak jobs report sent traders stampeding into U.S. government bonds as a safe investment. Bond prices rose sharply, and the yield on the benchmark 10-year U.S. Treasury note fell to 1.46 percent, the lowest on record.
The Standard & Poor's 500 index was down 22 points at 1,287. The Nasdaq was off 52 at 2,775. Both of those indexes were still up for the year -- about 2 percent for the S&P and 6 percent for the Nasdaq.
May was by some measures the worst month for the stock market in two years. That was primarily because investors were worried about a worsening debt crisis in Europe.
But the jobs report returned the United States to the flashpoint of market fear, said Todd Salamone, director of research for Schaeffer's Investment Research in Cincinnati.
"The weaker jobs report translates into anticipation of slower growth ahead and weaker corporate earnings, and that ratchets stock prices lower," Salamone said.
Stovall said that traders are waiting to see what governments and central banks might do to juice global economic activity. Otherwise, the losses would be even deeper, he said.
The Fed launched bond-buying programs in 2009 and 2010 to lower interest rates and help stock prices, but it has resisted a third round of that approach, known as quantitative easing.
Anticipation of bond-buying by the Fed "might put in a little bit of a floor to the market, but the overall economic picture is still bad," said Bob Gelfond, CEO of MQS Asset Management, a New York hedge fund.
The price of gold shot higher. It rose $37 an ounce to $1,601. For much of the past three years, investors have bought gold for safety during a turbulent time for the world economy.
The dollar weakened. The euro rose half a penny against the dollar to $1.24.
Gold spiked and the dollar fell partly because traders expect more intervention by the Federal Reserve, Gelfond said.
Bond-buying adds to the supply of money coursing through the economy and leads some investors to worry about inflation later, which would make the dollar less valuable. Traders buy gold as a hedge against inflation.
Stocks fell broadly. Only 20 companies in the S&P were higher for the day. Energy companies and financial stocks led the market lower. The price of a barrel of oil fell more than $3 to $83.54, extending a monthlong slide.
Caterpillar, which depends heavily on world economic demand, fell $2.63, or 3 percent, to $85.03. It was among the worst performers of the 30 stocks that make up the Dow.
The job picture remained dark elsewhere in the world. Unemployment in the 17 countries that use the euro currency stayed at a record-high 11 percent in April, and unemployment rose spiked to almost 25 percent in Spain.
There were also signs that growth in China, which was a bulwark during the global recession, is slowing significantly. China's manufacturing weakened in May, according to surveys released Friday.
Stocks were down considerably in Europe. The benchmark stock index fell more than 3 percent in Germany and Greece and more than 2 percent in France. British stocks were down but fared slightly better.