After 50 minutes of trade, the broad-market S&P 500 was down 26.22 points (1.3 percent) at 1,924.91.
The Dow Jones Industrial Average dropped 252.07 (1.5 percent) to 16,122.69, and the tech-rich Nasdaq Composite shed 41.90 (0.9 percent) at 4,691.60.
The Labor Department report showed the economy added fewer jobs than estimated, 173,000, but the previous two months' job gains were revised upward, pushing the unemployment rate down more than expected to 5.1 percent.
It was the last major jobs data before the Fed's policy arm, the Federal Open Market Committee, meets on September 16-17 to consider raising the key federal funds rate for the first time since 2006.
"Market participants may believe the slowing of job gains in August is enough to prevent a firming of Fed policy to 0.25 percent in September, but the Fed may not agree," said Jason Schenker at Prestige Economics.
All 30 Dow blue chips slid. Financials took a beating, with JPMorgan Chase down 2.1 percent, Goldman Sachs 2.2 percent and American Express 1.7 percent.
Industrial conglomerates Caterpillar and General Electric fell 1.9 percent and 1.8 percent, respectively. Boeing shed 1.1 percent.
Tech giant Apple was down 0.8 percent, less than sharp falls on IBM (-1.9 percent) and Microsoft (-1.8 percent).
Bond prices were little changed. The yield on the 10-year US Treasury was unchanged at 2.16 percent from Thursday, while the 30-year slipped to 2.92 percent from 2.93 percent. Bond prices and yields move inversely.