Stocks eased off their worst levels in the final hour of trading, but still finished firmly in the red Friday on the heels of a disappointing June government jobs report.

The Dow and the S&P 500 posted weekly losses, while the Nasdaq managed to eke out a gain for the fifth-consecutive week.

The Dow Jones Industrial Average tumbled 124.20 points, or 0.96 percent, to close at 12,772.47, led by Caterpillar and H-P .

The S&P 500 fell 12.90 points, or 0.94 percent, to end at 1,354.68. The Nasdaq dropped 38.79 points, or 1.30 percent, to finish at 2,937.33.

The CBOE Volatility Index, widely considered the best gauge of fear in the market, ended near 17.

For the week, the Dow shed 0.84 percent, the S&P 500 erased 0.55 percent, while the Nasdaq squeezed out a gain of 0.08 percent. BofA was the biggest laggard on the Dow for the week, while Wal-Mart gained.

Industrials led the weekly key S&P sector decliners, while consumer staples climbed.

"The economic recovery is clearly stuck in quicksand as job creation remains anemic and layoff announcements soar," said Todd Schoenberger, managing principal at The BlackBay Group.

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