NEW YORK (AP) — A disappointing jobs report sent investors out of stocks and the dollar Friday and into assets perceived as being safer. Foreign currencies and gold rose, as did bond prices, which sent interest rates lower. The yield on the two-year Treasury note hit a record low.

Stocks sank for most of the day but pared their losses in late afternoon trading. The Dow Jones industrials ended down 21 points after being down as much as 160 earlier in the day.

A closely watched monthly employment survey from the Labor Department confirmed what investors have been fearing: The US economic recovery is weakening. Private job growth was just 71,000 in July. That’s below what analysts had hoped for and far shy of the level that would be needed to reduce the unemployment rate, which remained steady at 9.5 per cent.

It was latest sign that a slowdown in US growth is the real problem with the global economy, not the European debt crisis that had financial markets in a tizzy for much of the spring.

US stocks fell on the report, sapping a strong upward trend from the past four weeks. The yield on the two-year Treasury reached a record low of 0.50 per cent, and the yield on the 10-year Treasury is its lowest since April 2009. The dollar dropped to a 15-year low against the Japanese yen.

Stocks have been volatile since reaching their highest level of the year in late April, when they turned lower throughout May and part of June as worries about Europe’s debt situation peaked. In July, a wave of strong earnings from major US companies like Caterpillar Inc. and UPS Inc. propelled stocks higher. The Dow Jones industrial average climbed 7.1 per cent last month, its strongest one-month gain in a year.

It’s not yet clear whether the pullback Friday means that investors will be ducking and covering for the foreseeable future. However with corporate earnings season nearly over, the market’s focus is turning back to the broader US economy. There have been several troubling signs of weakness: recent reports on housing, retail sales and income and spending have all been downbeat.

The monthly jobs report from the Labor Department is a key indicator on the health of the economy and is closely watched by investors and economists. Job creation has a huge effect on the rest of the economy, influencing how much people spend on cars, clothes, travel and even homes. The latest report confirmed that many employers are still reluctant to hire.

“The tension will play out for the rest of the year between corporate earnings and employment,” said Sarah Hunt, a research analyst at Alpine Funds. At some point, Hunt said, earnings will have to slow to match the weaker economy or employment will have to pick up to help maintain strong earnings.

On top of that, Europe’s economy is showing stronger signs of life than was expected just a few months ago, when mounting government debt there was hurting stocks worldwide. A healthier Europe gives investors another place to stash money if the US economy remains weak.

The euro has recovered nearly all of its losses from the worries over European government debt that flared up earlier this year. The euro is now at a four-month high against the dollar, after touching a four-year low in early June.

The Dow Jones industrial average closed down 21.42 points, or 0.2 per cent, at 10,653.56, having been down as much as 160 points earlier.

The Standard & Poor’s 500 index fell 4.17, or 0.4 per cent, to 1,121.64, while the Nasdaq composite index fell 4.59, or 0.2 per cent, to 2,288.47.

About five stocks fell for every two that rose on the New York Stock Exchange, where volume came to a very light 945 million shares. Trading volume has been extremely low in recent days, a sign that many investors are simply not participating in the market.

While stocks take a turn lower, bond investors have already been anticipating that the economy was headed for trouble. Even while the stock market was surging ahead in early June and then again for most of July, yields on Treasury notes have been heading steadily lower since early April as more money flows into ultrasafe Treasurys.