Stocks declined Friday after disappointing reports on jobs and manufacturing.
Factory orders fell 0.8 percent in August, snapping four months of gains. Economists had expected the gauge to rise 0.3 percent.
But the market wasn't as bothered by the factory-orders report as it was with the jobs report.
The Labor Department said the economy shed 263,000 jobs in September and the unemployment rate rose to 9.8 percent. The unemployment rate was as expected but the payrolls drop was much higher than the 180,000 job loss economists surveyed by Reuters had expected.
Investors have grown increasingly wary of the recovery following several disappointing economic numbers recently. More than two-thirds of readers polled by CNBC.com had expected the jobs number to be worse than economists had predicted.
"[E]conomic data rarely move in a consistent pattern ... 0we should not be surprised that there are bumps in the road," Joel Naroff of Naroff Economic Advisors wrote in a note to clients. "Unfortunately, investors want the latest data to always be better than the previous ones and that is unrealistic. Thus, they react wildly."
Naroff and other economists pointed out that a huge chunk of September's job losses came from the government and therefore, private-payroll losses weren't as bad as the headline number would make it seem.
"If, as I suspect, the October numbers turn out to be a lot better, we will all come back to the conclusion that the economy is moving out of the recession but the recovery is likely to be quite sluggish," Naroff said.
Today's slide came after the Dow dropped 203 pointsThursday in the market's worst decline since before the summer rally.
Wal-Mart shares ticked higher after Chairman Rob Walton warned that the retailer would ride out what is expected to be a slow US recovery, while its Asian operations should do better.
Speculation continued to swirl over the fate of CNBC.com parent General Electric.
GE CEO Jeff Immelt told reporters the company is in ongoing talks for either a partnership or initial public offering for the NBC Universal unit. CNBC reported Thursday that one plan under consideration would see cable giant Comcast take a 51 percent stake in the company.
CIT Group is launching a debt-exchange plan in hopes of avoiding a bankruptcy filing.
First Solar will be a stock to watch because it is replacing Wyeth in the S&P 500 at an undetermined date. Wyeth is being bought by Pfizer .
Crude oil futures , which have consistently tracked stock market movement, also tumbled after the US jobs report.
World markets fell in anticipation of the weak jobs report, with France's CAC-40 suffering the worst loss at 1.1 percent.
The International Olympic Committee will announce the host city for the 2016 Olympics at 1pm ET, with President Obama in Copenhagen to make his pitch for Chicago's bid.