U.S. stocks fell the most since November, erasing the Dow Jones industrial average’s 2012 advance, as U.S. employers added the fewest workers in a year and reports signaled global manufacturing was slowing.

All 10 groups in the Standard & Poor’s 500-stock index retreated as the gauge extended a drop from its April high further downward, to 9.9 percent. The KBW Bank Index slumped 4.9 percent. Bank of America, Apple and Boeing sank at least 2.9 percent. A measure of homebuilders in S&P indexes tumbled 7.8 percent. Newmont Mining rallied 6.7 percent as gold climbed the most since August on bets that measures will be taken to stimulate the U.S. economy.

The S&P 500 retreated 2.5 percent to close at 1,278.04. The benchmark measure fell below its average price of the past 200 days. The Dow slid 274.88 points, or 2.2 percent, to 12,118.57. About 8.4 billion shares changed hands on U.S. exchanges, or 24 percent above the three-month average.

“The weak jobs report confirms that the U.S. is vulnerable to a European situation that is going from bad to worse,” said Mohamed El-Erian, chief executive of Pacific Investment Management, the world’s largest manager of bond funds. “The report’s details speak to an unemployment crisis that is getting more stubbornly embedded in the structure of the economy. Looking forward, the employment situation will be further challenged by an ongoing synchronized global slowing.”

Equities tumbled as U.S. payrolls climbed by 69,000 last month, less than the most pessimistic forecast. The jobless rate rose to 8.2 percent. The Institute for Supply Management’s factory index fell after reaching a 10-month high. Manufacturing output shrank in Europe and slowed in China.

Concern about a global economic slowdown and a worsening of Europe’s debt crisis has taken the S&P 500 down for two straight months. The gauge trimmed this year’s gain to 1.6 percent. The Chicago Board Options Exchange Volatility Index, which measures the cost of using options as insurance against declines in the S&P 500, surged 11 percent to 26.66, the highest level since December.

The S&P 500 approached a level that would represent a 10 percent decline from this year’s peak in April. The benchmark gauge traded at 12.9 times reported profits, according to data compiled by Bloomberg. That’s 21 percent below its five-decade average of 16.4. Earnings in the S&P 500 are forecast to reach a record $104.74 a share in 2012.

Technical analysts say that the decline of the S&P 500 below its 200-day moving average could be a harbinger of further losses. It’s a “shot to the bulls,” according to Ryan Detrick, senior technical strategist at Schaeffer’s Investment Research in Cincinnati.

A measure of homebuilders in S&P indexes tumbled the most since August. PulteGroup slumped 12 percent to $8.26. D.R. Horton sank 8.4 percent to $15.21.

Casino companies dropped as Macau casino gambling revenue rose 7.3 percent in May, the slowest pace since July 2009, matching analysts’ estimates. Wynn Resorts, the casino company founded by billionaire Steve Wynn, dropped 5.5 percent to $97.38. Las Vegas Sands lost 7 percent to $42.97.

— Bloomberg News