The Dow Jones industrial average fell 2.2%, closing down 275 points. That drop leaves the Dow with a loss of 0.8% for 2012. Earlier this year, the blue-chip average was up more than 8%.
Declining by bigger amounts were the tech-heavy Nasdaq composite index and Standard & Poor's 500, losing 2.8% and 2.5%, respectively.
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But both of those indexes are up for the year: The Nasdaq by 5.5%, the S&P 500 by 1.6%.
Investors reacted negatively to May's jobs report, which showed nonfarm payrolls increasing just 69,000, falling well short of teh 150,000 expected, according to Michelle Meyer, economist at BofA Merrill Lynch Global Research. "This is the recovery of fits and starts, and we believe we are entering a slow patch in the second half of the year," she wrote.
Seeing such slow jobs numbers may not force the Federal Reserve to take action in June, but it makes the odds of some sort of stimulus in August "increasingly likely."
May was by some measures the worst month for the stock market in two years. Investors' worries about Europe's debt crisis intensified as the month wore on. Investors are fixating on the sluggish economy in Europe, slowing growth in Asia and the chances of the recovery in the U.S. losing steam.
The botched initial public offering of No. 1 social networking stock Facebook, which has left those shares down 27% from the offering price, has further dented confidence in the market. Shares of Facebook (FB) Friday fell $1.88, or 6.4%, to $27.72.
The weak jobs report sent traders stampeding into U.S. government bonds as a safe investment. Bond prices rose sharply, and the yield on the benchmark 10-year U.S. Treasury note fell to 1.46%, the lowest on record.
The price of gold also shot higher. It rose $49 an ounce to $1,613. For much of the past three years, investors have bought gold for safety during a turbulent time for the world economy.
The dollar weakend. The euro rose half a penny against the dollar to $1.24. A day earlier, fears about Europe's finances had pushed the euro to a nearly two-year low against the greenback.
Stocks fell broadly. Energy companies and financial stocks led the market lower. The price of a barrel of oil fell nearly 4% to $83.23, extending a monthlong slide.
Caterpillar stock (CAT), which depends heavily on world economic demand, fell 2.4%, to $85.52.
The job picture also darkened elsewhere in the world. Unemployment in the 17 countries that use the euro currency remained at a record-high 11% in April, and unemployment rose spiked to almost 25% in Spain.
There were also signs that growth in China, which was a bulwark during the global recession, is slowing significantly. China's manufacturing weakened in May, according to surveys released Friday.
Stocks were down considerably in Europe. The benchmark stock index fell more than 3% in Germany and Greece and more than 2% in France. British stocks were down but fared slightly better.
Contributing: Associated Press reports
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