U.S. stocks fell on Friday to close out their worst week in two months as disappointing jobs data joined other recent evidence pointing to a tepid economic recovery.
Adding to stocks' weaker tone was a technical move that indicated more selling pressure may be ahead. The S&P 500's 50-day moving average broke below its 200-day moving average, a break known as the death cross.
Non-farm payrolls fell in June for the first time this year, adding to a slew of economic reports signaling the U.S. recovery is slowing.
It's not really possible to be bullish about the jobs report, said Linda Duessel, market strategist at Federated Investors in Pittsburgh.
The people that are bidding down this market are looking at the many economic statistics we've had throughout this month of June, which were disappointing to slightly disappointing.
Financials and economically sensitive sectors were the biggest decliners. The S&P 500 financial index <.GSPF> shed 1.1 percent, while consumer discretionary stocks <.GSPD> were down 1.2 percent.
Volume on Friday was among the five lightest days of the year, with many participants leaving early for the long Fourth of July holiday weekend.
The Dow Jones industrial average <.DJI> dropped 46.05 points, or 0.47 percent, to 9,686.48. The Standard & Poor's 500 Index <.SPX> lost 4.79 points, or 0.47 percent, to 1,022.58. The Nasdaq Composite Index <.IXIC> fell 9.57 points, or 0.46 percent, to 2,091.79.
Earlier in the week, the S&P fell below the 1,040 level, viewed by many analysts as a critical support level which it had successfully held several times in the past five months.
For the week, the Dow fell 4.5 percent, the S&P lost 5 percent and the Nasdaq shed 5.9 percent.
According to technical analysts, a death cross occurs when a shorter-term average falls below a longer-term average. For a graphic, click on http://link.reuters.com/zyt55m. The phenomenon last occurred between the 50- and 200-day moving averages in December 2007, soon after the market began a decline that eventually took the S&P 500 to 12-year lows.
The Labor Department reported non-farm payrolls dropped by 125,000, the largest decline since October and affected by the loss of temporary government census jobs.
The unemployment rate fell to 9.5 percent, the lowest level since July, but only because a flood of jobless workers gave up their employment search. Private hiring rose 83,000, the department said, up from the previous month.
Other weak data on Friday came in new orders for U.S. factories, which showed the sharpest drop since the depth of the recession and the first decline in nine months.
U.S. pharmaceutical stocks advanced after a source familiar with the situation said French drugmaker Sanofi-Aventis was preparing an acquisition of $20 billion or more in the United States. Genzyme Corp rose 5.9 percent to $52.80 and Biogen Idec Inc gained 5.8 percent to $49.42.
Volume was about 7.15 billion shares traded on the New York Stock Exchange, the American Stock Exchange and Nasdaq, well below last year's estimated daily average of 9.65 billion.
Declining stocks outnumbered advancing ones on the NYSE by 1812 to 1209, while on the Nasdaq, decliners beat advancers 1681 to 948.
(Reporting by Chuck Mikolajczak; Editing by Kenneth Barry)