(Bloomberg News) U.S. stocks tumbled, erasing the 2012 advance in the Dow Jones Industrial Average, as employers added the fewest workers in a year, the unemployment rate rose while manufacturing output shrank in Europe and slowed in China.

Alcoa Inc., Caterpillar Inc. and Bank of America Corp. dropped at least 1.6 percent to pace losses among the largest companies. Wynn Resorts Ltd., MGM Resorts International and Las Vegas Sands Corp. slumped more than 2.8 percent as Macau casino gambling revenue grew at the slowest pace since July 2009. Facebook Inc. slid 4 percent after yesterday posting the biggest rally since its initial public offering last month.

The Standard & Poor's 500 Index lost 1.7 percent to 1,288.56 at 10:20 a.m. New York time, the lowest level since Jan. 9 on a closing basis. The Dow dropped 202.15 points, or 1.6 percent, to 12,191.30. Trading in S&P 500 companies was 23 percent above the 30-day average at this time of day.

"Yuck, this is really not good," said Michael Mullaney, who helps manage $9.5 billion as chief investment officer at Fiduciary Trust in Boston. He spoke in a phone interview."The overall jobs report is bad. We've got weak economic figures on a worldwide basis. We're at a very precarious point right now as far as investors' psyche is concerned."

Equities slumped as American employers in May added the fewest workers in a year and the unemployment rate unexpectedly increased as job-seekers re-entered the workforce. Payrolls climbed by 69,000 last month, less than the most-pessimistic forecast in a Bloomberg News survey, after a revised 77,000 gain in April that was smaller than initially estimated. The median estimate called for a 150,000 May advance. The jobless rate rose to 8.2 percent from 8.1 percent, while hours worked declined.

Global Manufacturing

Manufacturing in the U.S. grew at a slower pace in May as factories tempered production in response to weakness in the global economy, the Institute for Supply Management's factory index showed today. A gauge of manufacturing in the 17-nation euro zone fell to a three-year low of 45.1 in May, indicating a 10th month of contraction, while unemployment reached 11 percent, the highest on record. China's Purchasing Managers' Index dropped to 50.4 from 53.3, the weakest production growth since December.

A divergence in the sovereign yields of euro countries shows bets against the integrity of the 17-member currency bloc are growing. The euro area is in real danger of disintegrating unless policy makers revamp the bloc's fiscal and economic ties, Economic and Monetary Commissioner Olli Rehn said.

Concern about a global slowdown and a worsening of Europe's debt crisis drove the S&P 500 down 6.3 percent in May, for the second straight monthly retreat. The MSCI All-Country World Index of stocks tumbled 9.3 percent while the MSCI BRIC Index entered a bear market after plunging more than 20 percent from the March peak. The gauge tracks shares in Brazil, Russia, India and China, the biggest emerging markets.

Alcoa, Caterpillar