Updated from 4:06 p.m. EDT

Stocks fell for the second day in a row Friday after the government's jobs report for June came in well below expectations and traders used another round of weak second-quarter earnings guidance to back off positions going into the long Independence Day weekend.

The Dow Jones Industrial Average dropped 53.76 points, or 0.52%, to 10,280.40; the S&P 500 closed down 3.84 points, or 0.34%, to 1125.10; and the Nasdaq was down 9.40 points, or 0.47%, to 2006.15. The 10-year Treasury bond rallied after the employment report, gaining 27/32 in price and sending the yield down to 4.46%. The dollar fell against the euro but gained on the yen.

Volume was particularly light before the weekend, approaching only 1.1 billion shares on the New York Stock Exchange where advancers held a 2-to-1 majority over decliners. On the Nasdaq, nearly 1.2 billion shares changed hands, and decliners had about a 5-to-4 edge.

Tech stocks led declines, with the Philadelphia Semiconductor Index ending down almost 2.1%.

"The country will be more on guard during these patriotic holidays than other normal days," said Robert Pavlik, portfolio manager at Oaktree Asset Management. "Traders are taking the position that they don't want to be long into the weekend, but that gives regular long-term investors a chance to step in and pick up some bargains."

On the economic front, the U.S. added 112,000 new jobs to nonfarm payrolls in June, down from Wall Street's consensus estimate of 250,000 and below May's downwardly revised addition of 235,000 jobs. The unemployment rate held steady at 5.6% as expected, and hourly earnings grew by 0.1%, down from the previous estimate of 0.3%. Also, the average work week shortened to 33.6 hours from 33.8 hours.

"This is a very interesting 'good news/bad news' report," said Barry Ritholtz, chief market strategist with Maxim Group. "On the one hand, this doesn't appear to be an economy that's in danger of overheating anytime soon. But, while we've said that the Fed is behind the curve on raising interest rates, the data, at the very least, call the sustainability of the recovery into question.

"I don't want to say the economy is fragile here, but this is not a rip-roaring type of expansion," Ritholtz added. "You don't want to see it get too hot, so that the Fed has to crank up rates too fast, but you also don't want to see things soften to the point where the expansion stops and reverses. I'd like to see a little more vigor in the economy, but you can't put too much stock in one month's data, so now we're back on job watch for another 30 days."