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Stocks tumbled Friday after a hot jobs report dampened Wall Street’s expectations for more interest rate cuts from the Federal Reserve this year.
The Dow Jones Industrials crumbled 696/75 points, or 1.6%, to close Friday and the week 41,938.45.
The S&P 500 Index dropped 91.21 points, or 1.5%, to 5,827.04
The NASDAQ Composite plummeted 317.25 points, or 1.6%, to 19,161.63. All three of the major averages sustained weekly losses, with the S&P 500 off 1.8% and the NASDAQ down 2.4%. The 30-stock Dow is on pace for a 1.6% decline on the week.
Growth stocks that could be hurt the most if a spike in rates causes investors to get more conservative led the session’s losses. Chipmaker Nvidia shed 2.5%, while AMD dumped 5.2% and Broadcom lost 2.1%. Palantir was off by more than 1%.
U.S. payrolls grew by 256,000 in December, while economists polled by Dow Jones expect to see an increase of 155,000. The unemployment rate, which was projected to remain at 4.2%, fell to 4.1% during the month.
Traders give 97% odds the Fed stands pat on rates at its meeting later this month and now believe the central bank will hold rates where they are at the March meeting as well, based on fed funds futures trading. Odds of a March cut fell to around 25% following the data, down from 41% odds a day earlier. The Fed cut its benchmark rate by a quarter point last month.
Stocks took a leg lower after The University of Michigan’s consumer sentiment index signaled concern on the inflation front. The overall index came in at 73.2 for January, missing a Dow Jones estimate of 74. Part of that was driven by one-year inflation expectations rising to 3.3% from 2.8%. Five-year expectations also scaled to their highest level since June 2008.
U.S. markets were closed Thursday in memory of former President Jimmy Carter.
Prices for the 10-year Treasury sank, hiking yields to 4.76% from Wednesday’s 4.68%, its highest level since late 2023 after the jobs report. Treasury prices and yields move in opposite directions.
Oil prices regained $2.72 to $76.04 U.S. a barrel.
Prices for gold barreled ahead $26.00 an ounce to $2,716.80 U.S.
Indexes Feel Weight of Employment Report, Take Near-700-Point Spill