US Stocks sink as investors look ahead to election (ext.CNN)

NEW YORK (CNNMoney) -- U.S. stocks sank Friday afternoon as investors looked ahead to the election next week.

The Dow Jones industrial average fell 1.1%, while the Nasdaq slipped 1.3% and the S&P 500 shed 0.9%. The Dow and Nasdaq finished the week down 0.1% and 0.2%, respectively, while the S&P 500 was up 0.2%.

Stocks initially pushed higher Friday after the monthly jobs report showed that the economy added 171,000 jobs last month. Economists surveyed by CNNMoney expected 125,000 jobs. The unemployment rate ticked up to 7.9% from 7.8% in September, in line with expectations.

The monthly report has taken on increased importance amid the economic downturn. President Obama and Republican rival Mitt Romney have also been focusing much of their campaigns on who can create more jobs. The report comes just four days before the election.

"We've seen a steady improvement in economic data over the last couple of weeks, and this is another positive data point," said Art Hogan, managing director at Lazard Capital Markets. "But after the initial reaction, the market has put the jobs report in the rear view mirror and is quickly moving onto what comes next week with the election, and what that will mean for the fiscal cliff."

According to a CNNMoney survey of investment strategists last month, the pending fiscal cliff poses the biggest threat to stock market.

The Congressional Budget Office and most economists believe Washington's failure to address the fiscal cliff -- the simultaneous onset of tax increases and spending cuts that will be triggered on Jan. 1 -- would push the country back into recession and drive unemployment upward. That, of course, would put pressure on financial markets

"No matter who the inhabitant is in the White House, we need some sort of resolution on the fiscal cliff," said Hogan. "That's what's looming and affects economic growth almost immediately."

In other economic news, factory orders rose 4.8% in September, according to data from the Census Bureau.

Currencies and commodities: The dollar was higher against the euro, the British pound and the Japanese yen.

Oil for December delivery fell 2.6% to $84.86 a barrel.

Gold futures for December delivery also fell sharply, slipping 2.4% to $1,675.20 an ounce.