U.S. stocks tumbled on Friday (Saturday AEDT) as a robust December jobs report reduced expectations for additional Federal Reserve rate cuts in the near term.
The Dow Jones Industrial Average dropped 696.8 points, or 1.6%, closing at 41,938.5. The S&P 500 declined 1.5% to 5,827, and the Nasdaq Composite fell 1.6% to 19,161.6.
For the week, all major indices posted consecutive losses. The S&P 500 fell 1.9%, the Nasdaq Composite declined 2.3%, and the Dow dropped nearly 1.9%.
Among data releases, the U.S. economy added 256,000 jobs in December, significantly surpassing the 160,000 increase expected, while the unemployment rate dropped to 4.1% from the expected 4.2%.
Traders now estimate a 97% likelihood that the Federal Reserve will maintain current rates at its January meeting, accord to the CME FedWatch Tool.
Investor sentiment took another hit after the University of Michigan’s consumer sentiment index for January came in at 73.2, below the expected 73.8. Inflation expectations contributed to the decline, with one-year projections rising to 3.3% from 2.8%, and five-year expectations climbing to their highest level since mid-2008.
Growth stocks bore the brunt of the sell-off, as rising rates often drive investors toward safer assets. Nvidia shares fell 3%, while AMD and Broadcom declined 4.8% and 2.2%, respectively. Palantir Technologies also slipped over 1%.
On the bond markets, 10-year and 2-year yields surged to fresh yearly highs, up 4.6% and 2.7% to 4.763% and 4.383%, respectively.