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Stocks struggled to hold onto the week's gains Friday following a dismal government employment report and as investors looked ahead to next week's earnings season.

Track the Major U.S. Indexes

The Dow Jones Industrial Average came off its lows but still lower, led by GE [GE  18.888    -0.412  (-2.13%)   ] and BofA [BAC  10.65    -0.27  (-2.47%)   ] after finishing almost 100 points higher in the previous session.

Merck [MRK  36.02    0.29  (+0.81%)   ] was trading higher on the blue-chip index.

The S&P 500 and the tech-heavy Nasdaq plunged almost 1 percent each. All three major indices are struggling to hold onto the week's gains. The CBOE Volatility Index, widely considered the best gauge of fear in the market, jumped above 16.

All key S&P sectors were lower, led by financials, industrials and energy.

Nonfarm payrolls rose only 18,000, the weakest reading since September, according to the Labor Department, well below economists' expectations for a 90,000 rise from a Reuters survey. The unemployment rate climbed to 9.2 percent, the highest since December, from 9.1 percent in May.

Many economists raised their forecasts on Thursday after a stronger-than-expected reading on U.S. private hiring from payrolls processor ADP, and expected gains of anywhere between 125,000 and 175,000.

The government revised April and May payrolls to show 44,000 fewer jobs created than previously reported. The private sector added 57,000, accounting for all the jobs created, with government employment shrinking 39,000 because of fiscal problems at local and state governments.

"This number is horribly disappointing and ridiculously bad!" said Todd Schoenberger, managing director of LandColt Trading. "The monthly jobs figure continues to frustrate Americans and the short-term outlook appears to be dire considering there is no credible plan for job creation presented by the administration."

"Today, risk is off for investors and could very well remain that way into the fall," Schoenberger added. (Read More: 'Horrific' Jobs Report Renews Fears of Double-Dip Recession)

“[The numbers are] certainly disappointing, but it’s not the end of the world,” said Scott Brown, chief economist at Raymond James. “It’s still evidence of a slow patch, but the economic news we had from retail sales and manufacturing suggest that things will improve a bit into the second half.”

Gold prices jumped nearly 1 percent as investors piled into the precious metal as a safe haven. However, oil declined in volatile trade with U.S. light, sweet crude falling $2.47 to settle at $96.20 a barrel and London Brent crude near $118. The dollar tumbled against a basket of major currencies.

Investors will be looking ahead to second-quarter earnings season, which kicks off next Monday with Alcoa [AA  16.28    -0.21  (-1.27%)   ] reporting after-the-bell.

Bank stocks were the biggest laggards, led by Bank of America [BAC  10.65    -0.27  (-2.47%)   ] after the financial giant reached a deal to sell its Balboa Life Insurance unit to Securian Financial. Rivals Citigroup [C  41.99    -0.64  (-1.5%)   ] and JPMorgan [JPM  40.68    -0.64  (-1.55%)   ] were also lower.

On the tech front, Google [GOOG  Loading...      ()   ] declined after Morgan Stanley downgraded the Internet giant's rating to "equal-weight" from "overweight" and cut its price target to $600 from $645.

Apple [AAPL  357.96    0.76  (+0.21%)   ] was flat following news that there were security holes discovered in the tech giant's iPhones and iPads. Meanwhile, Canaccord raised its prirce target on the firm to $500 from $485.

Baidu [BIDU  146.85    -0.16  (-0.11%)   ] slid after the Chinese search-engine firm announced a major restructuring of its business lines.

Among retailers, Citigroup cut its price target on Target [TGT  51.06    -0.61  (-1.18%)   ] to $61 from $64 and JCPenney [JCP  32.92    -0.81  (-2.4%)   ] from $45 to $41, but boosted its rating on TJX [TJX  55.07    0.08  (+0.15%)   ] to "hold" from "sell" and price target to $56 from $46.

Gaming stocks were higher after JPMorgan raised its price targets on Las Vegas Sands [LVS  45.8232    0.5232  (+1.15%)   ], Wynn [WYNN  160.611    3.121  (+1.98%)   ] and MGM Grand [MGM  14.84    0.11  (+0.75%)   ].

Caterpillar [CAT  109.93    -1.70  (-1.52%)   ] pared some losses following news that the firm completed its acquisition of Bucyrus International to expand its line of mining equipment.

Also on the economic front, U.S. wholesale inventories rose 1.8 percent in May compared with a revised 1.1 percent April gain. Economists had forecast May inventories would climb 0.7 percent from a 0.8 percent increase in April, according to a Reuters poll.

And talks to raise the debt ceiling continue after Obama told lawmakers on Thursday he would not sign a short-term extension and said negotiators would work through the weekend on a deal to avoid a debt default, Reuters reported.

On Tap Next Week:

MONDAY: Earnings from Alcoa, Chevron interim results
TUESDAY: International trade, 3-yr note auction, FOMC Minutes, Campbell Soup analyst meeting
WEDNESDAY: Weekly mortgage apps, import & export prices, Bernanke speaks, oil inventories, 10-yr note auction; Earnings from Yum Brands
THURSDAY: PPI, retail sales, jobless claims, business inventories, 30-yr bond auction, money supply, NPD video games sales; Earnings from JPMorgan and Google
FRIDAY: CPI, Empire state mfg survey, industrial production, consumer sentiment, credit card default rates reported, Dell shareholder mtg; Earnings from Citigroup and Mattel

And talks to raise the debt ceiling continue after Obama told lawmakers on Thursday he would not sign a short-term extension and said negotiators would work through the weekend on a deal to avoid a debt default, Reuters reported?

A. TRUE
B. FALSE