NEW YORK Wall Street has plunged, with the Dow Jones industrials closing down more than 400 points, after oil prices shot higher and neared $140 for the first time.
The prospect of higher energy prices that could hobble consumers and worsen a slowing economy had investors frenetically pulling money out of stocks.
Wall Street began the day falling on a disappointing unemployment report. The price of oil, which rose more than $11 and traded as high as $139.12, sent stocks lower throughout the session.
The Dow is down about 405 at athe 12,200 level.
The Labor Department said the nation's unemployment rate rose to 5.5 percent in May from 5.0 percent in April. The rate, logging its biggest monthly rise since February 1986, is now at its highest level since October 2004. Wall Street, on average, had predicted an uptick to 5.1 percent.
The number of U.S. jobs shrank by a smaller-than-expected 49,000, but that figure offered Wall Street only a little solace given that May marked the fifth straight month of jobs losses. Signs that the U.S. job market is deteriorating more than anticipated could thwart investors' hopes that the economy is poised for recovery later this year a belief that has helped drive the stock market higher over the past couple months.
Employment data are important to investors because when Americans lose their jobs or fear that they might they tend to pare discretionary spending. Already, consumers are spending less due to soaring food and energy prices, and oil's ascent Friday added to the market's trepidation. A slowdown could deal a big blow to the economy as consumer spending accounts for more than two-thirds of U.S. economic activity.
Crude oil has made an aggressive rebound this week, rising more than $7 a barrel in two days after falling amid a drop in demand for gasoline. In premarket electronic trading, light sweet crude jumped $6.26 to $134.05 a barrel on the New York Mercantile Exchange after reports that a Morgan Stanley shipping analyst predicted oil would jump to $150 a barrel by July 4.
Friday's pullback comes a day after the Dow jumped nearly 214 points, showing its largest daily point gain since April 18 following better-than-expected sales from retailers and a dip in jobless claims. The good economic news helped investors shrug off the more than $5-a-barrel spike in oil prices. But the further advance in oil on Friday appeared too much for investors to overlook.
Bond prices moved higher after the weak jobs data. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 3.96 percent from 4.04 percent late Wednesday.
The dollar declined against other major currencies a move that makes each barrel of oil more expensive. Gold prices rose.