Jobs Data Wallop Wall Street

Ian Shepherdson, chief economist with High Frequency Economics, said that one number is not a trend, but these data will scare the Fed into believing the worst is yet to come.

"[The Fed] will ease 25 basis points on Sept. 18 but should ease 50," he said. "Remember, this report does not fully reflect the market turmoil."

Meanwhile, former Fed chief Alan Greenspan said there are many similarities between the current market situation and those of years when the stock market crumbled.

"The behavior in what we are observing in the last seven weeks is identical in many respects to what we saw in 1998, what we saw in the stock-market crash of 1987," said Greenspan, according to The Wall Street Journal.

"The jobs data are saying the Fed has to cut rates, but Greenspan has come out saying it's not going to make a difference," said Mendelsohn. "There is a commodity play developing, which shows that that side of the market expects a rate cut."

Treasury bonds rallied following the weak labor report. The 10-year rose 1-3/32 in price, cutting the yield to 4.37%. The 30-year note added 1-20/32 in price, yielding 4.70%.

Gold futures rose $5.10 to close at $709.70 an ounce, and silver jumped 22 cents to $12.76 an ounce. The dollar, meanwhile, sank against the world's major currencies.