NEW YORK (TheStreet) -- The major U.S. indices deteriorated in the final hour of trading Friday, ending more than 3% lower after a rough session spurred by weaker-than-expected May job growth, which dampened recovery hopes.


Although the unemployment rate declined to a lower-than-expected 9.7%, temporary Census hiring accounted for the bulk of job growth in May, according to the Labor Department.


The Dow Jones Industrial Average closed below the 10,000 level, losing 323 points, or 3.2%, to close at 9,932. On the week, the Dow lost 2%. The S&P 500 gave up 38 points, or 3.4%, to finished the session at 1065, which was 2.3% lower than a week ago. The Nasdaq shed 1.7% week-over-week, and fell 84 points, or 3.6% lower, to close at 2219.


'When you strip out temporary Census hiring and look at private sector growth, the jobs report was clearly a disappointment and an indication of the tenuous recovery that we're in the midst of,' said Jim Baird, chief investment strategist for Plante Moran Financial Advisors.


'The other side of this story is that as the need for Census workers begins to decline, this temporary support that we've been getting to the jobs number could reverse unless private sector hiring picks up significantly,' he added.

The Labor Department reported an increase of 431,000 nonfarm payrolls in May, missing economists' expectations for an increase of 500,000 jobs. The unemployment rate declined to a lower-than-expected 9.7%, besting economists' projections for a rate of 9.8%. The bulk of May's growth, however, was attributed to government hiring for the 2010 Census, totaling 411,000 temporary positions. The Labor Department also revised March and April data to amount to 22,000 fewer jobs than initially reported.

'The blowout jobs report for May disappoints because it is mostly froth with little substance,' said PNC Chief Economist Stuart Hoffman who said the most promising aspects of the report were hours and earnings, which both increased in May.

Hoffman said job gains were weak across most industries, particularly construction, which was down 35,000 jobs in May.

'Homebuilders are cutting back now that the homebuyers' tax credit has expired,' he said.

Crude oil for July delivery lost $3.10, or 4.2%, to settle at $71.51 a barrel.

Elsewhere in commodity markets, the August gold contract gained $7.70, or 0.6%, to settle at $1,217.70 an ounce.