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News of a rapidly weakening job sent stocks falling Friday as investors feared that the recession will be deeper and more prolonged than many have expected. The major indexes were all down more than 1 percent and the Dow Jones industrials fell 180 points.

The Labor Department's report that employers slashed 533,000 jobs in November came in much higher than the 320,000 that economists forecast. The job losses were severe enough to add to expectations that Washington will have to take even bigger steps to boost the economy.

Although stocks fell after the report, analysts said Friday's retreat likely would have been steeper if the market hadn't tumbled in the final hour of trading Thursday in anticipation of a weak reading.

"What we're seeing here is the market telling you that a downward drop in employment was somewhat expected," said Craig Peckham, equity trading strategist at Jefferies & Co.

"In a kind of paradoxical sense, the really ugly employment numbers probably helped the case for more help from Washington, whether it's through the broader stimulus plan or more targeted industry measures."

Job losses were widespread, hitting manufacturing, construction, retail, financial and other sectors. It was the biggest monthly loss of jobs since 1974.

While the rise in the unemployment rate wasn't as steep as the 6.8 percent forecast, investors clearly believe the employment outlook remains bleak - especially as the layoffs keep coming. On Thursday, bellwether companies like AT&T Inc. and DuPont Co. announced they were cutting thousands of jobs.

The fear on Wall Street is that a rising unemployment rate will, among other things, lead to a more severe pullback in consumer spending, which is a crucial component to helping the economy rebound. Weak retail sales reports for the month of November released Thursday added to these concerns.

"The news is consistently dreadful and is likely to remain so for some time as layoffs continue and economic reports come in," said Gary Townsend, president and chief executive of private investment group Hill-Townsend Capital Inc.

In midmorning trading, the Dow Jones industrial average fell 180.40, or 2.15 percent, to 8,195.84 after falling 216 points Thursday.

Broader stock indicators also declined. The Standard & Poor's 500 index fell 17.93, or 2.12 percent, to 827.29, and the Nasdaq composite index fell 24.08, or 1.67 percent, to 1,421.48.

The Russell 2000 index of smaller companies fell 8.42, or 1.92 percent, to 431.11.

Five stocks fell for every one that rose on the New York Stock Exchange, where trading volume came to a moderate 302.2 million shares.

Bond prices showed modest movements Friday. The yield on the benchmark 10-year Treasury note, which moves opposite its price, inched up to 2.57 percent from 2.56 percent late Thursday. The yield on the three-month T-bill, considered one of the safest investments, rose to 0.02 percent from below 0.01 percent late Thursday, but still indicated extreme fear among investors.

The dollar rose against other major currencies, while gold prices fell.

Light, sweet crude fell $1.71 to $41.96 a barrel on the New York Mercantile Exchange. Concerns about the economy and weakening energy demand have kept oil prices down near four-year lows. The price of oil has fallen a staggering 70 percent since peaking at $147.27 in July.

Independent investment strategist Edward Yardeni said Friday's employment snapshot confirms the nation is mired in a difficult recession but that the extent of the weakness likely will galvanize government officials.

"The number was a shocker to such an extent that it's clearly going to require an enormous stimulus response from Washington," he said. "Cleary the Fed and the Treasury are going to move even faster."

The Federal Reserve and the Treasury have been taking unprecedented steps to revive the economy since the mid-September bankruptcy of Lehman Brothers Holdings Inc. Other programs have sprung from the government's $700 billion bailout of the banking sector. The Treasury said Thursday it is considering a plan to encourage banks to make mortgage loans at low rates. That could help patch up the troubled housing market, which many analysts say is crucial to any economic recovery.

Wall Street has reacted with both optimism and indifference in recent months as policymakers have tried to revive troubled credit markets and stabilize wobbly banks. Some analysts have been hopeful that relative quiet in the markets for more than a week portends a return of some stability because of the government's efforts, while others warn that the volatility in the market will continue.

"The markets are, in my view, acting not stable at all but with excessive volatility and unpredictability," Townsend said. "It's a very difficult market to invest into and a very difficult market to trade."

Part of investors' uncertainty centers on the automakers. Investors are observing a second day of congressional hearings with the heads of Detroit's top three automakers, who are appearing on Capitol Hill in an effort to save their troubled industry.

General Motors Corp., Ford Motor Co. and Chrysler LLC are collectively seeking $34 billion in emergency funding. While the market largely expects the companies will win some sort of government aid, support for the troubled carmakers isn't assured. Friday's jobs report likely put added pressure on lawmakers to offer a lifeline that would let the companies avoid bankruptcy.

GM fell 5 cents, or 1.2 percent, to $4.06, while Ford rose 9 cents, or 3.4 percent, to $2.75. Chrysler isn't publicly traded.

Meanwhile, Merrill Lynch & Co. shareholders approved the investment bank's sale to Bank of America Corp. early Friday, in a move that will create the nation's largest financial services firm.

Bank of America agreed to buy Merrill for $50 billion after the collapse of rival investment firm Lehman Brothers Holdings Inc. in September raised doubts about the viability of independent investment banks in general. The value of the all-stock deal has since fallen to about $20 billion, based on Bank of America's Thursday closing price of $14.34.

Bank of America shareholders were set to vote on the acquisition at 11 a.m. EST. The deal is expected to close during the first quarter.

Optimism that buoyed some overseas markets following massive interest rate cuts across Europe Thursday deflated following the report on U.S. jobs. In afternoon trading, Britain's FTSE 100 fell 2.26 percent, Germany's DAX index fell 4.71 percent, and France's CAC-40 declined 5.72 percent. Japan's Nikkei stock average slipped 0.08 percent on the day.

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U.S. stocks fell to their lowest levels in more than five years Wednesday amid more volatility and worries about a serious economic slowdown not only in the U.S. but worldwide.

On Wednesday, the Dow Jones Industrial Average tumbled 514.45 points, or 5.69%, to 8,519.21. The broad S&P 500 shed 58.27 points, or 6.1%, to 896.78. The tech-heavy Nasdaq composite fell 80.93 points, or 4.77%, to end at 1,615.75.

In recent trading sessions, stocks appeared to be digging out of the deep hole they had excavated in September and early October. But at Wednesday's close the S&P 500 plunged to a new low for the year, a level it has not seen since April 2003.

"This is a market that is leaving most people without words for description," says Chris Johnson of Johnson Research Group. On Wednesday, there was more evidence that the credit crunch, which caused so much concern in the past month, was easing slightly. However, "the market doesn't have any shortage of things to worry about," Johnson says.

Among the alarming developments Wednesday were signs that the world's worst financial crisis in 80 years is hammering emerging markets. That prompted emergency central bank moves and calls for international help to curb investor flight. Reuters reported emerging market stocks, sovereign debt and currencies all came under intense pressure as investors unwound funding positions amid worries about the deteriorating world economy.

Hungary ratcheted up interest rates by three full points to defend its currency. Belarus's central bank said it had requested credit from the International Monetary Fund and Ukrainian Prime Minister Yulia Tymoshenko said she expected her country would receive "substantial" financial aid from the IMF next week. The IMF is also ready to help Pakistan, which needs funds to avoid a balance of payments crisis, and Iceland, driven close to bankruptcy as frozen credit markets caused its banks to fail.

Hemmed in by the global financial squeeze and commodities slump, Argentina's leftist government has seemingly found a novel way to find the money to stay afloat: cracking open the piggy bank of the nation's private pension system, according to a Wall Street Journal dispatch. The government proposed to nationalize the private pensions, which would provide it with much of the cash it needs to meet debt payments and avoid a second default this decade.

Reflecting worries about the world economy, commodity prices continued to slide Wednesday. On the NYMEX, crude oil dropped $4.80, or 6.65%, to $67.38. The Energy Dept.'s weekly report showed that crude oil inventories rose 3.2 million barrels, above analysts' forecast of a rise of 2.9 million barrels. Many traders worry the world is headed into a severe recession that will reduce demand for all commodities, fears that overshadow OPEC's emergency meeting in Vienna on Friday, where the cartel is expected to cut output 1 million barrels.

"The market is trying to assess how deep this global recession is going to be," says Peter Cardillo, chief market economist at Avalon Partners. While lower oil prices may be good for U.S. consumers, falling commodities hurt emerging economies that have been an engine of global growth in recent years, he says.

December gold futures sank $37 to $731 per ounce as the dollar index soared against most currencies on foreign bank demand.