Strong growth in the service sector and record high oil prices sent stocks sharply lower on Friday on renewed inflation fears. A weaker-than-expected job creation report, which initially gave investors hope that economic growth would remain manageable, was ultimately ignored, and stocks finished mostly lower for the fourth straight week.
The early release of the Institute for Supply Management's service sector index, which wasn't due until Tuesday, showed greater-than-expected growth in non-manufacturing businesses -- and a sharp jump in consumer prices. That worried skittish investors that inflation might yet take hold and prompt the Federal Reserve to push for potentially jarring interest rate hikes.
The announcement stole momentum from the Labor Department's jobs report, usually the most important piece of economic data every month. Only 110,000 new jobs were created in March -- half of what economists had expected. February's figure also was revised lower by 19,000 jobs. The nation's unemployment rate fell to 5.2 percent from 5.4 percent in February.
"We rallied nicely on the jobs report, but then we got a conflicting message from the ISM report. That report doesn't usually carry as much weight, but it hit the bond market hard, and that moved to stocks pretty quickly," said Brian Pears, head equity trader at Victory Capital Management in Cleveland. "In a market where we're really this nervous to begin with, it only takes a little bit to turn things around."
The Dow Jones industrial average fell 99.46, or 0.95 percent, to 10,404.30. Broader stock indicators also retreated. The Standard & Poor's 500 index slipped 7.67, or 0.65 percent, to 1,172.92, while the NASDAQ composite index dropped 14.42, or 0.72 percent, to 1,984.81.
Continuing fears of inflation, prompted by higher oil prices and a growing economy, plagued the markets during the week, as they have done for most of March, despite a strong session on Wednesday. For the week, the Dow lost 0.37 percent and the NASDAQ fell 0.31 percent. The S&P 500 posted its first gain in the past four weeks, rising 0.13 percent.
Declining issues outnumbered advancers by a 5 to 4 ratio on the New York Stock Exchange, where preliminary consolidated volume came to 2.18 billion shares, compared with 2.21 billion traded on Thursday.
The Russell 2000 index of smaller companies was down 3.52, or 0.57 percent, at 611.55.
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