Dow closes nearly 250 points lower following weak jobs report

NEW YORK (AP) -- Wall Street plunged while bonds surged higher Friday after the government reported payrolls in August fell for the first time in four years rather than rising as had been expected. The Dow Jones industrial average fell nearly 250 points.

Investors were taken aback by the Labor Department's report that payrolls dropped by 4,000 in August, the first decline since August 2003. Economists had forecast payrolls would increase by 110,000. However, the unemployment rate held steady at 4.6 percent as expected.

Weak jobs report raises new fears of recession

WASHINGTON (AP) -- For the first time in four years, employers have cut jobs, raising new fears that a deep housing slump and a painful credit crunch could push the economy into a recession.

Pressure is building on the Federal Reserve to lower interest rates. Many economists predict the deteriorating employment climate will lead to a rate cut on Sept. 18.