U.S. stocks slide after disappointing jobs report

Last Updated Jun 3, 2016 4:07 PM EDT

U.S. stocks fell after a surprisingly soft employment report for May intensified worries about the economy and canceled any thoughts that the Federal Reserve would hike interest rates later this month.

"This is a disappointing number," Art Hogan, chief market strategist at Wunderlich Securities, told CBS MoneyWatch of the addition of 38,000 jobs last month, the worst number in five years. "Any chance of a June liftoff is in the rear view mirror," Hogan said, referring to the monetary policy decision in two weeks.

"The unemployment rate fell, but for the wrong reason as labor force participation declined for the second consecutive month," Curt Long, chief economist at the National Association of Federal Credit Unions, said in a statement. "As for the Fed, this likely puts an end to the hopes of a rate hike in June, and will probably shift market expectations to September."

Financials led Wall Street declines, with the banks that would profit from increased rates hardest hit.

JPMorgan Chase (JPM) dropped 1.8 percent; Citigroup (C) fell 3.4 percent and Wells Fargo (WFC) declined 1.8 percent.

Scaling back from a triple-digit slide, the Dow Jones Industrial Average (DJI) lost 31 points, or 0.2 percent, at 17,807. Dropping from a seven-month high, the S&P 500 (SPX) declined 6 points, or 0.3 percent, at 2,099, with six of its 10 sectors in the red. The Nasdaq Composite (COMP) fell 29 points, or 0.6 percent, to 4,943.

The U.S. dollar fell with stocks, while Treasuries and gold futures rallied.

In another piece of bad news on the economy, the Institute for Supply Management's services index declined to 52.9 in May from 55.7 the prior month. Services make up more than 70 percent of U.S. jobs.

Separately, the Commerce Department reported factory orders rose 1.9 percent in April, the largest increase since October.