NEW YORK ( TheStreet) -- U.S. indices finished moderately lower Friday but were each down roughly 5% during a week that battered the market with disappointing economic data, including larger-than-expected job losses than June.

Despite some see-sawing at the very beginning and end of the session, stocks spent most of the trading day in the red. The Labor Department said the economy lost another 125,000 jobs in June and the unemployment rate fell to 9.5% from 9.7%, as the work force declined.

Stocks managed to pare losses in the afternoon and closed off the day's lows. The Dow Jones Industrial Average lost 46 points, or 0.5%, to close at 9,687, and fell 4.5% on the week. The S&P 500, which gave up 5% during the week, shed 5 points, or 0.5% on Friday, closing at 1023. The Nasdaq shed 10 points, or 0.5%, to close at 2092 and saw the largest week-over-week loss of 5.9%.

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Commenting on the state of the economy this morning, President Obama said June's unemployment report reflected the planned phase-out of 225,000 census jobs but showed the sixth-straight month of private sector job growth. The president also announced new broadband infrastructure investments aimed at boosting job creation and limiting geographic barriers.

"It wasn't a very favorable report," said Keith Hembre, chief economist and chief investment strategist at First American Funds of Minneapolis. "It was decent but didn't fully meet expectations. The unemployment rate did come down, but there were a whole bunch of caveats around that. There was a very low labor participation rate -- if that had remained steady, the unemployment rate would have increased to 9.8%."

"Both the average and median rate of unemployment moved to new highs. Couple that with the decline in the average work week and average hourly earnings and you get a pretty weak month for household income. That has implications for consumer spending and GDP."

Hembre said the market's muted reaction after some volatility immediately following the report was to be expected since investors have been responding to a string of disappointing economic news all week.

Overseas on Friday, Hong Kong's Hang Seng slipped down by 1.1% while Japan's Nikkei inched 0.1% higher. The FTSE in London gained 0.6%, while the DAX in Frankfurt shed 0.4%.

The Economy

The Labor Department said the economy lost 125,000 nonfarm jobs in June, compared with May's upwardly revised increase of 433,000 jobs. According to consensus estimates on, economists had been expecting a decline of 100,000 jobs. The unemployment rate dropped to 9.5% in June from 9.7% in May, which was better than the rise to 9.8% that Wall Street had been projecting. The labor force, which includes people actively seeking work as well as current employees and impacts the monthly unemployment rate, saw a steep drop in June as 652,000 left the work force.

The average work week slipped to 34.1 hours in June from 34.2, and hourly earnings declined by 0.1%, after rising 0.2% in May. Economists hadn't expected any change to the average work week and were projecting an uptick of 0.1% in hourly earnings.

Stuart Hoffman, PNC chief economist, said the June report doesn't support fears of an impending double-dip recession.

"The drag of the shedding of census workers will be felt for the remainder of the summer, but it will be a smaller net loss in the months ahead. Hidden underneath the dismal deadline is a gain of 83,000 private-sector workers, which was a decent increase from the 33,000 private-sector job gain in May," he said, adding that April private-sector growth was upwardly revised to 241,000, the strongest monthly gain so far this year.

The Commerce Department said factory orders declined by 1.4% in May, which was much larger than the 0.6% decline that economists had been anticipating. Additionally, April's initially reported increase of 1.2% was revised down to a 1% uptick.

Company News

The transportation sector was the hardest hit with shares of UAL Corp ( UAUA) and Continental Airlines ( CAL) down 10.3% and 9.3%, respectively, and Delta Air Lines ( DAL) lost 5.9%.

General Electric ( GE), Caterpillar ( CAT) and Bank of America ( BAC) put on the weakest performance on the Dow, while Verizon ( VZ), Microsoft ( MSFT) and Coca-Cola ( JNJ) were the session's top gainers.

Wilshire Bancorp ( WIBC) slumped 11.6% after it temporarily suspended its dividend and warned of an unexpected second-quarter loss, citing a spike in net loan charge-offs and an elevated provision for loan losses.

Shares of Tesla ( TSLA) have been closing steadily lower ever since its Tuesday debut on the Nasdaq, following its very successful IPO. Friday was no exception as the stock lost 12.6%, to close at $19.20.

Apple ( AAPL) said the formula it uses to calculate the new iPhone 4's signal strength display is off and displays two more bars that it should. Apple said it will adopt AT&T's ( T) formula and will issue a free software update within a few weeks to correct the problem.

Staples ( SPLS) acquired Finnish office supply retailer, Oy Lindell Ab, to expand its Nordic business.

Shares of BJ's Wholesale ( BJ) shed 0.09%, despite two separate upgrades. Goldman upgraded the stock to neutral from sell and Jefferies upgraded it to buy.

American International Group ( AIG) is reportedly reconsidering the sale of two Japanese life insurance companies for $5 billion, according to the Wall Street Journal.

Toyota ( TM) will recall 270,000 vehicles globally to fix faulty engines.

Sanofi-Aventis ( SNY), France's biggest drugmaker, is reportedly preparing a major U.S. acquisition, according to Bloomberg.

Commodities and the Dollar

Crude oil for August delivery lost 81 cents, or 1.1%, to settle at $72.14 a barrel.

Elsewhere in commodity markets, the August gold contract added $1, or 0.1%, to settle at $1,207.70 an ounce.

The dollar was trading lower against a basket of currencies, with the dollar index down by 0.3%.


The benchmark 10-year Treasury fell 7/32, lifting the yield to 2.977%.

The two-year note rose 1/32, diluting the yield to 0.629%. The 30-year bond slipped 25/32, raising the yield to 3.942%.

--Written by Melinda Peer in New York.

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