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Oct. 7 (UPI) -- Stocks fell sharply Friday, giving up many of the gains made during the two-day surge that kicked off October, as the Labor Department reported a drop in unemployment. The Dow Jones Industrial Average dropped 630.15 points, or 2.11% to close at 29,296.79. The S&P 500 fell 104.86 points, or 2.8% to 3,639.66, and the Nasdaq Composite plunged 420.91 points, or 3.8%, to 10,652.4.
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The three major U.S. stock indexes closed the week ahead, boosted by sharp gains on Monday and Tuesday. The Dow rose 2% for the week, while the S&P 500 climbed 1.5% and the Nasdaq edged up 0.7%.
Friday's lackluster finish comes as the Bureau of Labor Statistics reported U.S. employers added 263,000 jobs in September and unemployment fell to 3.5%.
Continued strength in the economy pushed stocks lower amid concerns that the Federal Reserve's efforts to continue tightening monetary policy to slow inflation will cause a recession.
"While the data was about as expected, the drop in the unemployment rate is seemingly what the markets are obsessed with because of what it means for the Fed," said Peter Boockvar, chief investment officer at Bleakley Financial, according to CNBC.
"When combined with the low level of initial jobless claims, the pace of firings remains muted and this of course gets the Fed all fired up about continuing its aggressive rate hikes."
U.S. President Joe Biden touted the jobs report as proof that the economy is strong and manufacturing is returning to the United States.
The 10-year Treasury yield continued its longest growth streak since 1977 to close the week at 3.883%. The two-year yield rose to 4.306%.
Oil markets continued their ascent, buoyed by the Organization of Petroleum Exporting Countries plans announced Wednesday to cut oil production by 2 million barrels per day beginning in November.
Brent crude climbed 3.7% Friday to $97.92 per barrel, a 15% gain for the week. West Texas Intermediate rose 4.7% Friday to $92.64 a barrel, up 16% for the week.
