A month after the rate fell 0.3 percentage points to 7.8 percent, the tick upward was a reminder that the economic recovery was halting at best.
With New York still recovering from a massive hurricane, the Dow Jones industrial average was down 119.46 points, 1.05 percent, to 13,193.16.
By close of trading, the Nasdaq composite index shed 37.93 points, 1.26 percent, to 2,982.13. The Standard and Poor's 500 index lost 13.39 points, 1.26 percent, to 1,414.20.
On the New York Stock Exchange, 908 stocks advanced and 2,100 declined on a volume of 3.6 billion shares traded.
The benchmark 10-year treasury rose 2/32 to yield 1.718 percent.
The euro fell to $1.2838 from Thursday's $1.2943. Against the yen, the dollar rose to 80.47 yen from 80.14 yen.
In Tokyo, the Nikkei 225 index added 1.17 percent, 104.35, to 9,051.22.
In London, the FTSE 100 index added 0.11 percent, 6.63, to 5,868.55.
Jessica Simpson shares three-way kiss with friends in photo
Senate Democrats to pull all-nighter on climate change