The Dow Jones industrial average lost 0.4 percent. The Nasdaq composite index skidded 1.3 percent. The Standard & Poor's 500 index was 0.6 percent lower.

The jobs report showed that payrolls increased by only 18,000 last month. Economists surveyed by Briefing.com had forecast the report would show that employers added only 70,000 jobs in the month, down from a revised 115,000 increase in November.

The unemployment rate jumped to 5 percent, up from 4.7 percent, which is a 17-month high. Since 18,000 new jobs is not enough job growth to keep up with increases in the labor pool, economists had forecast the unemployment rate would rise to only 4.8 percent.

Stocks to watch Friday include Dow component Boeing (BA, Fortune 500), which reported late Thursday that commercial jet orders soared 35 percent in 2007 to 1,413, supported by demand for its new 787 aircraft, which saw orders more than doubled to 369 from 157 a year earlier.

But Scott Carson, the head of Boeing's commercial aircraft until told in-house publication Boeing Frontiers that he didn't believe the company would be able to have a fourth straight year of orders above 1,000 in 2008, citing the toll higher fuel prices will take on its airline customers.

Home furnishings and housewares retailer Bed Bath & Beyond (BBBY, Fortune 500) announced after the close Thursday that current quarter profit would miss Wall Street estimates and forecast sales at its stores open at least a year would be flat in the period. Shares plunged 6.6 percent in after-hours trading following the announcement.

General Motors (GM, Fortune 500) CEO Rick Wagoner said in an online chat Thursday that the company is still pushing to get its ambitious plug-in hybrid vehicle, the Volt, into production by 2010. But despite what he called "massive resources" being put into development, the company "can't guarantee that at this time," he said.

The Volt is designed to run solely on a rechargeable lithium-ion battery now in development for most trips. GM, which saw 2007 sales fall 6 percent in the face of higher fuel prices, has already started heralding the Volt in advertising campaigns, even though it is not yet available.

Also in the news Friday is Spark Networks (LOV), parent company of the popular dating site JDate.com, which has put itself up for sale, according to a report in the New York Times. 

NEW YORK (CNNMoney.com) -- The outlook for stocks turned sour Friday after a government report showed that jobs grew much less than expected last month.

Futures plummeted after 8:30 a.m. ET, when the Labor Department released its December report.

The report showed that payrolls increased by only 18,000 last month. Economists surveyed by Briefing.com had forecast the report would show that employers added only 70,000 jobs in the month, down from a 94,000 increase in November. Since that's not enough job growth to keep up with increases in the labor pool, economists are also looking for the unemployment rate to rise to 4.8 percent from 4.7 percent, which would be a 17-month high.

Some economists had warned that the report could come in weaker, perhaps even showing a drop in Americans with jobs - especially since the government collected information from employers during a week when much of the country was hit by severe winter weather.

Economist John Silvia said before the release that a report that is either weaker than forecasts or stronger could cause a sell-off in stocks.

"You're basically facing an economy that will be really close to, if not in, recession," he said. "So a weak number will be very disappointing, very worrisome. But a stronger-than-expected number really diminishes the chance of the Fed lowering rates here. So stocks really have a narrow range of what's acceptable."

Silvia said he also thinks results of the Iowa Caucus, with victories by Democrat Barack Obama and Republican Mike Huckabee are probably weighing on stock futures, although the impact on trading Friday will pale in comparison to the jobs report.

"Both Obama and Huckabee are unconventional, populist candidates," said Silvia. "It just creates a lot more uncertainty, which the markets don't like."

The jobs report comes amid growing anxiety about the threat of a U.S. recession that has been fueled by surging oil prices. Oil futures reached $100 a barrel for the first time Wednesday and crossed that milestone during the trading session on Thursday, although once again it retreated below that benchmark before the close.

In early electronic trading Friday, crude prices remained near $99 a barrel, with a barrel of light sweet crude trading down 31 cents at $98.87 a barrel.

Jitters about the U.S. slowdown and weak auto sales reported Thursday hammered stocks in Japan, where the benchmark Nikkei sank 4 percent as traders returned from an extended holiday. European stocks got off to a positive start.

Stocks to watch Friday include Dow component Boeing (BA, Fortune 500), which reported late Thursday that commercial jet orders soared 35 percent in 2007 to 1,413, supported by demand for its new 787 aircraft, which saw orders more than doubled to 369 from 157 a year earlier.

But Scott Carson, the head of Boeing's commercial aircraft until told in-house publication Boeing Frontiers that he didn't believe the company would be able to have a fourth straight year of orders above 1,000 in 2008, citing the toll higher fuel prices will take on its airline customers.

Home furnishings and housewares retailer Bed Bath & Beyond (BBBY, Fortune 500) announced after the close Thursday that current quarter profit would miss Wall Street estimates and forecast sales at its stores open at least a year would be flat in the period. Shares plunged 6.6 percent in after-hours trading following the announcement.

General Motors (GM, Fortune 500) CEO Rick Wagoner said in an online chat Thursday that the company is still pushing to get its ambitious plug-in hybrid vehicle, the Volt, into production by 2010. But despite what he called "massive resources" being put into development, the company "can't guarantee that at this time," he said.

The Volt is designed to run solely on a rechargeable lithium-ion battery now in development for most trips. GM, which saw 2007 sales fall 6 percent in the face of higher fuel prices, has already started heralding the Volt in advertising campaigns, even though it is not yet available.

Also in the news Friday is Spark Networks (LOV), parent company of the popular dating site JDate.com, which has put itself up for sale, according to a report in the New York Times. 

NEW YORK (CNNMoney.com) -- Employers added fewer jobs than expected in December while the unemployment rate shot up to a two-year high, according to a government report Friday that showed a job market much weaker than Wall Street expectations.

There was a net gain of 18,000 jobs, according to the Labor Department report, down from the revised 115,000 gain reported in November. Economists surveyed by Briefing.com had forecast a gain of 70,000 jobs.

The unemployment rate rose to 5 percent, the highest reading since November 2005, from a 4.7 percent reading in November. Economists had forecast the unemployment rate would rise but only to 4.8 percent. 

NEW YORK (CNNMoney.com) -- General Motors might not be able to hit its target to have its breakthrough electric-powered car the Chevrolet Volt in production by 2010, according to comments made by CEO Rick Wagoner during an online chat.

Wagoner, who participated in an online forum Thursday to mark the 100th anniversary of the automaker, said the company continues "to put massive resources into production as soon as possible." But he cautioned, "2010 would be great, but (we) can't guarantee that at this time."

The Volt, unveiled at the Detroit auto show a year ago, is a so-called "plug-in" hybrid that would have a lithium-ion battery that can be recharged on common household electric current.

GM says it should be able to travel up to 40 miles powered by just the battery. On longer trips the Volt would use a motor powered by gasoline or ethanol to charge the batteries, a system it calls "E-Flex."

GM (GM, Fortune 500) has already started to build advertising campaigns around the Volt, even though in the best-case scenario it is years away from production. It is seen as a way of trying to change public perceptions about the fuel efficiency and environmental responsibility of the U.S. automaker, which is more closely associated with large SUVs or pickup trucks.

"The Chevy Volt, and the E-Flex system, are really important for GM's, and I think the whole industry's, future," Wagoner said. "With the growing demand for oil, we need to diversify the sources of power for autos."

But GM and its suppliers still have work to do on developing a battery that can meet the demands for the car. Wagoner said GM is are currently bench testing batteries, but didn't give any more details about how those tests were going.

GM reported a drop in December sales Thursday that left its 2007 sales down 6 percent. Its market share fell to 23.7 percent from 24.6 percent a year earlier. While rival Toyota Motor (TM) also reported a drop in December sales, it ended the year with a 3.1 percent gain in sales, taking its U.S. market share up to 16.2 percent from 15.4 percent a year earlier.

The sales gains at Toyota were helped by a nearly 70 percent jump in sales of its Prius hybrid sedan, as well as its other hybrid offerings. The Toyota hybrids run on a combination of power from a traditional gasoline engine and an electric motor, but they are not plugged in to recharge the battery.

Those sales helped Toyota move past Ford Motor (F, Fortune 500) into the No. 2 spot in U.S. sales. It also helped its Toyota brand move past both Ford and Chevrolet to become the nation's best-selling brand. 

NEW YORK (CNNMoney.com) -- The labor market is expected to end 2007 with a whimper, but even that modest forecast could be seen as "the good old days," since monthly job losses may become common in the year ahead, according to economists.

The December employment report due at 8:30 a.m. ET Friday should see a net gain of 70,000 jobs in the month, according to economists surveyed by Briefing.com, down from the 94,000 gain reported in November.

That gain is roughly half of what is seen as necessary to keep pace with the growth in the nation's labor force, and economists are expecting the unemployment rate to edge up to 4.8 percent, a 22-month high for that key measure.

Those forecasts were made before Thursday's ADP National Employment Report for December showed only a 40,000 job gain in the private sector in the month, sharply off of the 173,000 gain it calculated for November. The report uses payroll data from hundreds of businesses, both large and small.

The Monster Employment Index, which tracks online job search listings, also fell 14 points in December, with only about half of that decline attributed to seasonal factor, according to the firm.

With economists looking for economic growth to stall in the months ahead, many are forecasting that employers will get very cautious with their hiring plans going forward. While much of the job weakness in 2007 was concentrated in residential construction, manufacturing and finance, many believe that weakness will spread this year.

"At the margins, businesses are being more cautious about spending," said economist David Kelly, the chief market strategist for JPMorgan Funds. "Consumers are addicts and they'll keep spending. But if businesses expect recession and put in hiring freezes, that'll have an impact."

Kelly believes there are quarters ahead that will notch a net loss of jobs, even if the overall economy continues to grow. And many economists say they're nervous about whether the economy will be able to keep growing this year.

"If nothing else goes wrong, we'll avoid a recession," said David Wyss, chief economist for Standard & Poor's. "Unfortunately I can give you a long list of things that can go wrong right now -- oil prices, currency weakness, foreign confidence in the U.S. declining, the credit crunch, housing prices, consumer and investor panic."

Wyss said he believes the chance of a recession this year stands at about 40 percent, but that even if the economy continues to dodge those bullets, he's looking for much weaker job growth in the year ahead. He's forecasting just under 1 million jobs added in 2008, which would be down from his estimate of about 1.5 million jobs added last year.

But Gus Faucher, director of macroeconomics for Moody's Economy.com, said he's looking for about a 60 percent drop in hiring in 2008 if the economy avoids a recession, and possibly a job loss for the year if economic activity starts to decline. And his firm now puts the chance of a recession at 50 percent.

"If it's the wrong side of that 50 percent, then we see employment losses starting in the middle of the year and lasting for two or three quarters," he said. "Our baseline forecast is still for weak expansion, but even if that's the case, the weakness in the labor market is going to spread. We certainly could see a few negative months mixed up in there."

Some executives involved in job searches believe that employers will keep hiring this year, but most of them agree with economists forecasting that job gains will slow.

John Challenger, CEO of the outplacement firm Challenger, Gray & Christmas which tracks layoff announcements, said that the 2007 layoff announcements were at seven year low, and ended with December showing the lowest level of job cuts announcements of the year.

"It seems likely to me that fears of market collapse or recession are overblown and creation will come in stronger than most people expect," he said. "When you see job loss and downsizing slowing down, you'll inevitably see job creation. What's remarkable about the last six months is that given the fears out there, we haven't seen job cutting and declines outside of housing and automotive."

Jonas Prising, president for North America for staffing firm Manpower agrees employers have not been shaken by the subprime mortgage meltdown as much as many feared. He points to his firm's survey of first quarter hiring plans, conducted in November, which showed 22 percent of employers still expect to add to their payrolls during the first quarter of 2008, while 12 percent expect to reduce staff levels, readings that were little changed from a year earlier.

"The job market will soften somewhat and not fall off a cliff," said Prising. "Employers are more cautious when they're hiring. They'll go to greater steps before they add people to payrolls. But they're still hiring.

Richard Castellini, the vice president of consumer marketing for the online job search site CareeBuilder.com, said he could see net job gains slowing to 50,000 a month, but he doubts there will be job losses.

"We see a slowing but still a steady hiring," he said."There's still strong demand across a lot of areas."

Joel Prakken, chairman of Macroeconomic Advisors, which processes the ADP payroll services data to produce that firm's monthly employment report, said that the smaller employers tracked by the firm have continued with strong hiring levels, even as large employers trimmed jobs in the December reading.

"The one thing you can say for sure, small businesses continue to be the powerhouse of employment. It's pretty impressive," he said. His forecast is for job growth to average about 90,000 a month throughout 2008, down almost 30 percent from 2007's gains. But he sees stronger gains being posted in the later portion of the year. 

At 8;12 a.m. ET, Nasdaq futures were lower and S&P futures were up, but that could quickly change at 8:30 a.m. ET when the Labor Department releases its December report.

Economists surveyed by Briefing.com forecast the report could should employers added only 70,000 jobs in the month, down from a 94,000 increase in November. Since that's not enough job growth to keep up with increases in the labor pool, economists are also looking for the unemployment rate to rise to 4.8 percent from 4.7 percent, which would be a 17-month high.

But there are some economists who warn the report could come in weaker than expected, perhaps even showing a drop in Americans with jobs - especially since the government collected information from employers during a week when much of the country was hit by severe winter weather.

Economist John Silvia said even beyond the weather, there's enough sign of weakness in the economy right now that he estimates there's at least a 10 percent chance the report will show a net loss of jobs for the month.

And he said a report that is either weaker than forecasts or stronger could cause a sell-off in stocks.

"You're basically facing an economy that will be really close to, if not in, recession," he said. "So a weak number will be very disappointing, very worrisome. But a stronger-than-expected number really diminishes the chance of the Fed lowering rates here. So stocks really have a narrow range of what's acceptable."

Silvia said he also thinks results of the Iowa Caucus, with victories by Democrat Barack Obama and Republican Mike Huckabee are probably weighing on stock futures, although the impact on trading Friday will pale in comparison to the jobs report.

"Both Obama and Huckabee are unconventional, populist candidates," said Silvia. "It just creates a lot more uncertainty, which the markets don't like."

The jobs report comes amid growing anxiety about the threat of a U.S. recession that has been fueled by surging oil prices. Oil futures reached $100 a barrel for the first time Wednesday and crossed that milestone during the trading session on Thursday, although once again it retreated below that benchmark before the close.

In early electronic trading Friday, crude prices remained near $99 a barrel, with a barrel of light sweet crude trading down 31 cents at $98.87 a barrel.

Jitters about the U.S. slowdown and weak auto sales reported Thursday hammered stocks in Japan, where the benchmark Nikkei sank 4 percent as traders returned from an extended holiday. European stocks got off to a positive start.

Stocks to watch Friday include Dow component Boeing (BA, Fortune 500), which reported late Thursday that commercial jet orders soared 35 percent in 2007 to 1,413, supported by demand for its new 787 aircraft, which saw orders more than doubled to 369 from 157 a year earlier.

But Scott Carson, the head of Boeing's commercial aircraft until told in-house publication Boeing Frontiers that he didn't believe the company would be able to have a fourth straight year of orders above 1,000 in 2008, citing the toll higher fuel prices will take on its airline customers.

Home furnishings and housewares retailer Bed Bath & Beyond (BBBY, Fortune 500) announced after the close Thursday that current quarter profit would miss Wall Street estimates and forecast sales at its stores open at least a year would be flat in the period. Shares plunged 6.6 percent in after-hours trading following the announcement.

General Motors (GM, Fortune 500) CEO Rick Wagoner said in an online chat Thursday that the company is still pushing to get its ambitious plug-in hybrid vehicle, the Volt, into production by 2010. But despite what he called "massive resources" being put into development, the company "can't guarantee that at this time," he said.

The Volt is designed to run solely on a rechargeable lithium-ion battery now in development for most trips. GM, which saw 2007 sales fall 6 percent in the face of higher fuel prices, has already started heralding the Volt in advertising campaigns, even though it is not yet available.

Also in the news Friday is Spark Networks (LOV), parent company of the popular dating site JDate.com, which has put itself up for sale, according to a report in the New York Times.