U.S. stocks dropped on Friday after a dismal report on the labor market appeared to confirm the recent glut of data signaling the economic recovery was waning.

U.S. employment rose by 54,000 in May, far less than expected, to record its weakest reading since September, while the jobless rate rose to 9.1 percent.

Stocks pared losses after the Institute for Supply Management said its services sector index rose to 54.6 last month from 52.8 in April, just above forecasts for 54.0.

Certainly the jobs number wasn't good. The ISM service number was pretty good. It gives us some comfort that this economic soft patch we are looking at is just that -- a temporary soft patch -- rather than the start of a double-dip recession, said Phil Orlando, chief equity market strategist at Federated Investors in New York.

It's just one data point, it's a snapshot in time, we've got to see a lot more of that, and I don't know that we are going to see that right here.

Recent data, such as regional manufacturing, have pointed to a slowing economy, prompting debate among investors about the duration of the economic softness.

After closing at its highest level since June 2008 on April 29, the S&P 500 has dropped 4.5 percent.

The Dow Jones industrial average <.DJI> dropped 75.19 points, or 0.61 percent, to 12,173.36. The Standard & Poor's 500 Index <.SPX> fell 7.23 points, or 0.55 percent, to 1,305.71. The Nasdaq Composite Index <.IXIC> lost 16.47 points, or 0.59 percent, to 2,756.84.

Analysts point to the S&P 500's intraday low of 1,294.70 on April 18 as a technical support level, a number which the index appears to have tested and bounced off on Friday.

Newell Rubbermaid Inc had the biggest percentage drop on the S&P 500, down 11.9 percent to $14.97 after the storage container maker cut its forecasts for the year, and said second-quarter results will miss estimates.

(Reporting by Chuck Mikolajczak; editing by Jeffrey Benkoe)