U.S. stocks stumbled on Friday as financials were hit by a court ruling that voided two home foreclosures and as data showed disappointing jobs growth last month.

After trading flat earlier, stocks turned lower as the euro fell further and oil prices turned negative.

Wells Fargo & Co and US Bancorp lost a ruling by Massachusetts' top court, which said the banks failed to show they held the mortgages at the time they foreclosed. The decision could affect foreclosures nationwide.

It's going to delay things at best and just increases the uncertainty as far as the type of exposure they might have, said Alan Lancz, president of Alan B. Lancz & Associates Inc in Toledo, Ohio.

Wells Fargo shares gave up 3.4 percent at $31.05 and US Bancorp shed 1.1 percent to $25.99. The KBW Bank index <.BKX> lost 1.6 percent.

The Dow Jones industrial average <.DJI> slipped 50.82 points, or 0.43 percent, to 11,646.49. The Standard & Poor's 500 Index <.SPX> fell 6.60 points, or 0.52 percent, to 1,267.25. The Nasdaq Composite Index <.IXIC> lost 17.92 points, or 0.66 percent, to 2,691.97.

Even with Friday's decline, the S&P 500 and Dow were on track for their sixth straight week of advances.

The broad S&P is up about 0.8 percent so far this week, extending the market's rally during the final months of 2010. Analysts said some profit-taking heading into the weekend wasn't surprising.

Phil Orlando, chief equity market strategist at Federated Investors in New York, noting the reaction to the foreclosure ruling, said, The market doesn't need a whole lot of negativity to spark some profit-taking.

Investors treaded lightly after the mixed employment report that showed non-farm payrolls rose 103,000, below analysts' expectations.

The report also showed a surprisingly large number of people gave up searching for work, tempering the positive news of a big drop in the unemployment rate.

The euro fell to a near four-month low against the dollar. Stocks and the euro showed a significant correlation last year, with the currency viewed as a proxy for euro zone debt concerns.

The court decision is the latest on the validity of foreclosures conducted without full documentation. The issue last year prompted an uproar that led lenders such as Bank of America Corp , JPMorgan Chase & Co and Ally Financial Inc to temporarily stop seizing homes.

The S&P 500 found support at its 14-day moving average, which is around 1,262. The index briefly broke below that before popping back up.

On Capitol Hill, Federal Reserve Chairman Ben Bernanke sounded cautiously more upbeat than in the recent past, citing improvements in consumer spending and a drop in claims for jobless benefits as hopeful signs for the recovery.

(Reporting by Leah Schnurr; Editing by Kenneth Barry)