Wall Street shares fell the last 2 days of the trading week as a government report showing an unexpected surge in the number of job losses in September prompted further retrenchment by investors.
The Dow Jones Industrial Average shed 21.61 points (0.23 percent) on Friday to close at 9,487.67.
For the week, the blue chip gauge surrendered nearly 1.9 percent -- its second consecutive weekly decline and the worst week-over-week decline since mid-June.
The technology-heavy Nasdaq composite dropped 9.37 points (0.46 percent) to 2,048.11 while the Standard & Poor's 500 index fell 4.64 points (0.45 percent) to a provisional close of 1,025.21.
The market slipped into the red at the opening bell, just after the Labor Department announced that the US unemployment rate rose in September to 9.8 percent with 263,000 jobs cut.
The cuts were far worse than the 175,000 forecast by most economists and higher than the revised loss of 201,000 in August, according to the department's report on nonfarm payrolls, a key indicator of economic growth.
The market suffered one of its biggest drops in months Thursday after an unexpected jump in weekly jobless claims and a disappointing survey on manufacturing fuelled concerns over economic recovery.
Adding to the bearish market Friday was a Commerce Department report that factory orders fell 0.8 percent in August, defying economists' expectations for a 0.7 percent rise.
For the week, the blue chip gauge surrendered nearly 1.9 percent -- its second consecutive weekly decline and the worst week-over-week decline since mid-June.
The unemployment rate was up one-tenth of a point from August and in line with most forecasts, but would have been higher if not for 571,000 people dropping out of the labor force.
But payroll losses were far worse than expectations for a loss of 175,000 jobs. The number of job cuts rose sharply after a revised loss of 201,000 in August.
The US economy shrank at a 0.7 percent pace in the second quarter, the government said on Wednesday in its final revision for gross domestic product, offering more evidence of recovery from recession.
The figure was better than last month's estimate of a 1.0 percent drop in economic output, and stronger than the average estimate of private economists calling for a 1.2 percent annualised pace of decline.
The latest GDP report showed consumer spending, the main engine of economic activity, fell at a 0.9 percent pace, one-tenth of a point better than in last month's estimate.
Most economists expect the economy to show growth in the July-September quarter, in the range of 3.0 to 4.0 percent, in a rebound from the worst recession in decades, although some question the sustainability of growth.
US auto sales plunged 22.7 percent in September after the end of the popular "Cash for Clunkers" program left cautious consumers with few reasons to visit dealerships, industry data showed Thursday.
But the Detroit Three managed to claw back some of the share they had lost. Asian automakers had captured more than half the US market for the first time last month thanks to that loss.
Automakers were mixed in their outlook for the rest of the year after total sales fell to a seasonally adjusted annualized rate of 9.22 million vehicles from 14.09 in August and 12.57 in September 2008.
The three-billion-dollar Cash for Clunkers plan sparked nearly 700,000 auto sales before it expired in August by offering owners of old gasoline guzzlers up to 4,500 dollars toward a new, more fuel-efficient vehicle.
