All three indexes posted their worst one-day percentage loss in more than two weeks. Before Friday's session, the major indexes had been up between 2% and 3% for the week. But after the steep losses Friday, stocks ended the week little changed.
The Dow Jones industrial average (INDU) finished down 253 points, or 2.2%, with financial stocks leading the sell-off.
The S&P 500 (SPX) lost 30 points, or 2.5%, and the tech-heavy Nasdaq Composite (COMP) dropped 66 points, or 2.6%.
Before the opening bell, the Labor Department said employers showed a net jobs change of zero last month -- meaning the U.S. overall neither gained or lost positions. That was the weakest reading since September 2010, when the economy lost 27,000 jobs. The last time the headline employment change number was zero was in February 1945.
"This generally confirms what we already knew: August was a tough month," said Brad Sorensen, director of market and sector research with the Schwab Center for Financial Research. "The lack of job growth is modestly disappointing, but it doesn't change the overall picture."
Friday's bad news sent investors flocking to traditional safe havens, including gold and U.S. Treasuries. Concerns about the U.S. economy slipping back into a recession have been in the spotlight during the last several weeks.
Sorenson said investors will keep a close eye on economic data leading up the Federal Reserve's two-day meeting in September.
"I think the bar for another round of quantitative easing, or something along those lines, is still fairly high," Sorensen said. "If we get more bad numbers, that could change the story. But at this point, I don't expect we'll see any new Fed action at the next meeting."
Investors will also tune into President Obama's economic address to a joint session of Congress on Sept. 8, which is expected to focus on his long-awaited jobs proposal.
The dollar rose against the euro, but fell versus the Japanese yen and the British pound.
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