NEW YORK - Stocks fell to their lowest level in four months Friday after the government said hiring remained weak and another European country warned its economy was in trouble.

The Dow Jones industrial average dropped 323 points to close below 10,000. It was the lowest finish since February and the third-worst slide of the year.

Major indexes all lost more than 3 percent. The drop pushed the market back into "correction" mode, meaning a decline of at least 10 percent from a recent high.

Interest rates slid after traders shoveled money into the safety of Treasurys.

Retailers were among the hardest-hit stocks after investors bet that a weak job market would discourage consumers from spending. Macy's fell 6.5 percent. Financial stocks also fell sharply on concerns that borrowers would continue having problems paying their bills. Banks were hurt by more worries about their exposure to Europe's debt crisis. American Express lost 5.3 percent.

The government's May jobs report came as an unpleasant surprise for investors. The Labor Department said private employers hired just 41,000 jobs in May, down dramatically from 218,000 in April and the lowest number since January.

The unemployment rate fell to 9.7 percent from 9.9 percent in April. That was slightly better than the 9.8 percent unemployment rate economists had forecast.

Meanwhile, the spokesman for Hungary's prime minister described the country's economy as being in a "grave" situation. He also said his government was ready to avoid a crisis like the one facing Greece, which had to be bailed out by the European Union. Spain and Portugal are also struggling.

The Dow fell 323.31, or 3.2 percent, to 9,931.97.

The Standard & Poor's 500 index fell 37.95, or 3.4 percent, to 1,064.88.

The Nasdaq composite index dropped 83.86, or 3.6 percent, to 2,219.17.

Only three of the stocks in the S&P 500 index rose: Cephalon Inc., of Frazer, Chester County; Frontier Communications Corp.; and People's United Financial Inc.

Investors are also worrying about the effect that Europe's economic problems could have on the United States. During the last month, investors have been preoccupied with rising debts in Europe, fearing they could hobble the regional economy and eventually the United States.

A drop in the euro, the currency used by 16 countries in Europe, contributed to stocks' slide. The euro fell as low as $1.1956, a four-year low. Hungary does not use the euro, but the drop the currency was a sign of flagging confidence in Europe's economy.

The euro has fallen more than 10 percent since stocks peaked six weeks ago.