US stocks fell on Friday after oil prices climbed to a record over $53 a barrel and weaker-than-expected US job growth in September raised concerns about the economy's strength with less than a month to go before the presidential election.
Drops in semiconductor and drug stocks also dragged on the markets.
Semiconductor shares like Intel Corp pulled on the Dow, the Nasdaq and the S&P 500 after Prudential Equity Group started coverage of the sector with a "neutral" rating. Prudential said "long-term growth rates remain challenging."
Renewed concerns about the safety of arthritis drugs, after Johnson & Johnson warned about Remicade, prompted some investors to sell drug stocks, affecting the blue-chip Dow & the broader Standard & Poor's 500.
The Dow Jones industrial average closed down 70.20 points, or 0.69 percent, at 10,055.20. The Standard & Poor's 500 Index ended down 8.51 points, or 0.75 percent, at 1,122.14. The technology-laced Nasdaq Composite Index closed down 28.55 points, or 1.47 percent, at 1,919.97.
"All the negative news on the drug companies is dragging the sector down," said Tim Trainor, a senior trader with John Hancock Funds. "Then there is the combination of a disappointing unemployment report and high oil prices."
For the week, the Dow was down 1.35 percent, the S&P 500 was off 0.83 percent, and the Nasdaq was down 1.14 percent.
Friday's trading pace slowed to moderate after heavier volumes during the week. About 1.3 billion shares changed hands on Friday on the New York Stock Exchange, while about 1.7 billion traded on Nasdaq.
Declining stocks just barely outnumbered advancing ones on the NYSE, while on Nasdaq, more than two stocks fell for every one that rose.
US crude oil futures reached another record above $53 a barrel amid market concerns over tight supply as winter approaches the northern hemisphere.
Crude for November delivery settled at $53.31 a barrel, up 64 cents, after climbing to another record of $53.40 on the New York Mercantile Exchange.
Oil companies' stocks, however, helped limit some of the losses in the Dow and the S&P 500. Exxon Mobil Corp rose 10 cents to $49.84 and ConocoPhillips climbed 94 cents to $88.08.
Before the market opened, investor sentiment soured after the Labor Department reported that only 96,000 jobs were added to US nonfarm payrolls in September. That was sharply below economists' forecasts for a gain of 148,000 jobs.
The report, the last one on jobs before the presidential election on November 2, renewed concerns about whether the "soft patch" the economy hit in June may still be lingering. President George W. Bush faces Democratic challenger, Sen. John Kerry, in the second debate Friday night in St. Louis.
"Company executives remain cautious so we are probably in a slow employment growth environment," said Subodh Kumar, chief investment strategist at CIBC World Markets.
Boeing Co also hurt the Dow. Boeing's stock fell 2.4 percent, or $1.22, to $50.10, after US House and Senate negotiators ruled out an Air Force plan to lease modified 767 aircraft as refueling planes and said Boeing would have to compete for any tanker maintenance contract.
Among blue-chip drug stocks, Johnson & Johnson dropped 1.1 percent, or 60 cents, to $55.32 after it warned doctors that patients taking its rheumatoid arthritis drug Remicade may have a higher risk of lymphoma, a blood cancer.
Merck & Co Inc, another Dow component, fell 2.1 percent, or 64 cents, to $30.34. Merck pulled its arthritis drug Vioxx off the market last week after a study showed it doubled the risk of heart attack and stroke.
Pfizer Inc, also among the 30 stocks in the Dow, dropped 0.6 percent, or 19 cents, to $29.80 after Alpharma Inc on Friday started to sell a cheaper generic version of Pfizer's $3 billion-a-year epilepsy drug, Neurontin. Alpharma went ahead with its generic drug launch without waiting for a court ruling on Pfizer's request to block the copycat drug.
Among semiconductor stocks, Advanced Micro Devices Inc fell 4.3 percent, or 61 cents, to $13.50 as analysts questioned the company's optimistic forecast for demand in the fourth quarter.
AMD's rival Intel Corp which reports earnings on Tuesday, fell 3.3 percent, or 69 cents, to $20.55.
Alcoa Inc, the world's biggest aluminum producer, shed 2 percent, or 68 cents, to $33.40. Alcoa reported only a slight rise in third-quarter profits on Thursday, and a JP Morgan analyst lowered his fourth-quarter earnings estimate.
Manpower Inc, the world's second-largest staffing company, fell 3 percent, or $1.32, to $44.24.
Krispy Kreme Doughnuts Inc fell 4.3 percent, or 56 cents, to $12.51 after it said US securities regulators have ratcheted up their probe of Krispy Kreme's franchise buybacks.