Light, sweet crude fell $1.27 to settle at $97.91 a barrel on the New York Mercantile Exchange. Oil touched $100 per barrel this week for the first time, stirring concerns about inflation.
The employment figures overshadowed a report from the Institute for Supply Management, a business group, which said its December index of non-manufacturing activity showed the nation's service sector grew in December. However, the pace was slightly slower than in November and the index fell to 53.9 in December from 54.1 the prior month. Analysts had expected a deeper decline.
It's been a difficult start to 2008 on Wall Street. After selling off in the final session of last year on Monday, investors spent the first three sessions of the new year absorbing a weaker-than-expected reading on the manufacturing sector, oil that reached $100 a barrel and Friday's dismal employment numbers.
"It's hard to point to any piece of data in recent weeks that makes you feel comfortable," said Balestrino, noting that many bullish investors had hoped a strong jobs picture would lift Wall Street's mood.
"This the one piece that was holding up pretty well and now it's showing some weakness as well," he said. "In our business it's not the absolute number, it's the direction of the number and especially the direction versus the expectations."
In corporate news, a JPMorgan analyst lowered his rating on Intel to "neutral" from "overweight," citing a drop in chip orders from computer manufacturers during the fourth quarter and high inventories. Intel, one of the 30 stocks that comprise the Dow industrials, fell $2, or 8.1%, to $22.67.
Overseas, Japan's Nikkei stock average fell sharply, finishing down 4.0% to its lowest level since July 2006 after being closed since the previous Friday for holidays. The pullback followed uncertainty on Wall Street about the U.S. economy and rising oil prices.
Britain's FTSE 100 fell 2.0%, Germany's DAX index fell 1.3%, and France's CAC-40 fell 1.8%.