Stocks slid on Thursday after payrolls data showed much worse-than-expected job losses for June, a sign that hopes for a quick economy recovery may be premature.

U.S. employers cut 467,000 jobs in June, far more than the 363,000 forecast by a Reuters survey. The unemployment rate rose to 9.5 percent, the highest since August 1983, the government said on Thursday, as the labor market continues to struggle.

Stock losses were felt most heavily in the S&P 500's consumer discretionary sector<.GSPD>, which fell 3.3 percent. Hotelier Marriott International dropped 3.3 percent to $20.49, and clothing retailer Gap Inc lost 4.7 percent to $15.28.

The market has been on a high for the last few months, based on the belief that some of the stimulus seems to be working, said Gordon Fowler, Jr, chief investment officer of the Glenmede Trust Company in Philadelphia. But they now have reason to be disappointed as it doesn't appear that the stimulus has translated into new jobs.

If the economy were a car, I would say the brakes work, but it's not clear that the accelerator does.

Volume was light with Wall Street's trading desks thinly staffed ahead of the three-day U.S. Independence Day weekend.

The Dow Jones industrial average <.DJI> dropped 176.77 points, or 2.08 percent, to 8,327.29. The Standard & Poor's 500 Index <.SPX> fell 21.39 points, or 2.32 percent, to 901.94. The Nasdaq Composite Index <.IXIC> slid 44.65 points, or 2.42 percent, to 1,801.07.

Commodity prices slipped and U.S. Treasury debt prices edged higher after the jobs data. Crude oil futures fell $2.51, or 3.6 percent, to $66.80 a barrel, helped by a stronger U.S. dollar.

U.S. oil producer Exxon Mobil Corp slid 2.5 percent to $68.78, and its rival Chevron Corp lost 2 percent to $65.22.

NRG Energy Inc shares fell 4.4 percent to $24.91 after Exelon Corp raised its hostile takeover bid for the independent power producer by more than 12 percent to $7.45 billion, ahead of NRG's annual meeting.

Among Dow components, healthcare giant Johnson & Johnson said it would buy a $1 billion stake in Elan Corp plc and acquire most rights to the Irish company's portfolio of experimental drugs to treat Alzheimer's disease.

Elan's U.S.-traded shares shot up 13.7 percent to $7.96 on the New York Stock Exchange, while J&J's stock fell 1.8 percent to $56.05 and helped drag on the Dow.

In other economic news, a report showed U.S. factory orders were better than expected in May, but this was largely ignored as the stock market's broad sell-off continued through midday.

(Editing by Jan Paschal)

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