* Dow and Nasdaq also down for the week
* U.S. July payrolls below forecasts
* P&G up after sales plan; Tesla rises after results
* Indexes down: Dow 0.4 pct, S&P 0.3, Nasdaq 0.4 pct (Updates to close)
By Caroline Valetkevitch
NEW YORK, Aug 1 (Reuters) - U.S. stocks ended lower for a second day and the S&P 500 posted its biggest weekly decline since 2012 on Friday as concerns over Argentina's default continued to dog sentiment.
Data showing U.S. job growth slowed in July and the unemployment rate unexpectedly rose suggested the Federal Reserve has room to keep interest rates low for a while.
The jobs growth, which came in below economists' forecasts, relieved some investors worried about how soon the Fed could bump up interest rates after data on Thursday showed U.S. labor costs recorded their biggest gain in more than 5-1/2 years in the second quarter.
But concern remained over Argentina's debt problems after the country's default earlier this week. A U.S. judge on Friday criticized Argentina's decision to default and ordered negotiations between the country and holdout investors to continue.
"Anytime a country defaults on its debt, it's usually an unnerving event in the market. The risk-aversion people sell risky assets," said Natalie Trunow, chief investment officer of equities at Calvert Investment Management in Bethesda, Maryland.
But Trunow said the market dips should be seen as buying opportunities. "I don't think we're anywhere near the end of the expansion cycle."
Seven of the 10 S&P 500 sectors ended lower, with S&P financials among sectors with the biggest losses. JPMorgan Chase shares were down 2.1 percent at $56.48.
The Dow Jones industrial average fell 69.93 points, or 0.42 percent, to 16,493.37, the S&P 500 lost 5.52 points, or 0.29 percent, to 1,925.15, and the Nasdaq Composite dropped 17.13 points, or 0.39 percent, to 4,352.64.
For the week, the S&P 500 fell 2.7 percent, its biggest weekly percentage loss since the week ending June 1, 2012. The Dow ended down 2.8 percent for the week, while the Nasdaq fell 2.2 percent.
The Dow's losses dragged it further into negative territory for the year. For the year-to-date, it is down 0.5 percent.
Shares of Procter & Gamble Co, the world's largest maker of household products, rose 3 percent to $79.65 and helped to support the Dow and S&P 500 after it said it could sell about half of its brands in the next two years and cut jobs.
Electric car maker Tesla Motors Inc's second-quarter revenue nearly doubled from the prior year, while its adjusted earnings topped expectations. Shares rose 4.5 percent to $233.27.
In other economic data on Friday, a report from the Institute for Supply Management showed that manufacturing had its fastest expansion in more than three years in July.
About 7.2 billion shares changed hands on U.S. exchanges on Friday, above the 6.2 billion average for the last five days, according to data from BATS Global Markets. (Editing by Leslie Adler)