Thursday's stock market activity certainly demonstrates what happens when expectations for an economic recovery are suddenly called into question. Before markets opened, the U.S. Labor Department reported a sharp drop in payrolls in June, countering expectations for a modest decline, and stock markets were still in a tizzy by midday.

At noon, the Dow Jones industrial average was down 177 points or 2.1 per cent, to 8327. The broader S&P 500 was down 21 points or 2.3 per cent, to 902.

All 10 subindexes in the S&P 500 were down - and while defensives generally fared better than cyclicals, everything got whacked substantially.

Consumer discretionary stocks were the hardest hit, falling 3.3 per cent. Energy stocks fell 3.1 per cent, tracking the decline in the price of crude oil. Industrials fell 2.8 per cent.

Consumer staples were the best off, but only in a relative sense: These stocks, whose earnings tend to hold up when the economy is crumbling, were down 1.1 per cent. Health care stocks and financials each fell 2 per cent.

In Canada, the S&P/TSX composite index was down 101 points or 1 per cent, to 10,274.

Energy stocks were by far the worst off, falling 2.8 per cent. Industrials fell 1.5 per cent and consumer discretionary stocks fell 0.8 per cent. Financials fell 0.7 per cent.

Surprisingly, two subindexes moved higher. Materials rose 1.3 per cent, driven by gold producers (even as the price of gold sagged with a rising U.S. dollar). Telecom services rose less than 0.1 per cent.