Stocks fell on Friday, weighed by rising crude prices and after Wall Street posted its best one-day rise in three months on expectations February's payrolls would grow more than they did.
Brent crude prices pushed toward $116 a barrel as Libyan security forces began a violent crackdown on protesters in Tripoli and clashed with rebels near a major oil terminal.
Expectations from data earlier in the week that the jobs figure would be better had driven stocks to their biggest one-day gain in three months. But attention quickly turned to unrest in the Middle East and North Africa.
The battle is: has the economy turned in a permanent way, or are higher oil prices going to slow everything down, said Bernie McGinn, president at McGinn Investment Management in Alexandria, Virginia.
The unrest in North Africa and the Middle East that has boosted crude prices, coupled with subdued client activity, could weigh on the first-quarter earnings of large banks, according to Bank of America Merrill Lynch, which downgraded shares of Citigroup Inc
Goldman fell 1.6 percent to $161.93 and Citi dropped 2.6 percent to $4.56. The KBW bank index <.BKX> lost 1.7 percent.
The Dow Jones industrial average <.DJI> dropped 71.22 points, or 0.58 percent, to 12,186.98. The Standard & Poor's 500 Index <.SPX> fell 9.56 points, or 0.72 percent, to 1,321.41. The Nasdaq Composite Index <.IXIC> lost 12.73 points, or 0.45 percent, to 2,786.01.
Payrolls rose by 192,000 in February, slightly above the 185,000 gain expected by a Reuters poll, and the jobless rate unexpectedly dipped to 8.9 percent from 9 percent. Strong data earlier in the week fed optimism that the number would be above 200,000.
Earnings and hours are not increasing, and people's paychecks are not really increasing, said Kim Caughey Forrest, senior equity research analyst at Fort Pitt Capital Group in Pittsburgh. Without more cash in your pocket, there's no way you can spend it.
(Reporting by Rodrigo Campos; Editing by Padraic Cassidy)