Stocks Plunge Into the Weekend

While jobs growth slowed, the small rise in wage growth could provide inflation comfort to the Federal Reserve. The central bank will meet for fifth time this year on Tuesday, but no change in the target fed funds rate is expected.

Ian Shepherdson, chief economist with High Frequency Economics, said that the trend in slowing payroll growth means that the Fed will have to cut interest rates further down the road.

"The household survey is volatile but the six-month average change in employment has slowed to just 26,000," he said. "If this persists, unemployment will rise further and the Fed, eventually, will have to ease."

Paul Mendelsohn, chief investment strategist with Windham Financial, pointed out that the jobs number isn't showing a major disintegration in employment.

"I don't think this number has any effect on what the Fed will do in terms of their decision making," he said. "The market has many other issues to deal with, as the other shoe looks to be dropping in the credit market."

There was more trouble for investors on the economic docket. The Institute for Supply Management's services index fell to a reading of 55.8 in July from 60.7 the previous month. The data were well below consensus and hit the lowest point since March.

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