Dow falls 697 points after jobs report hits cut bets

A trader reacts during the opening bell at the New York Stock Exchange (NYSE) on February 28, 2020 on Wall Street in New York City — JOHANNES EISELE/AFP/Getty Images

U.S. stocks fell on Friday after a strong December jobs report lowered hopes for Fed rate cuts in 2025.
The economy added 256,000 jobs in December, beating expectations and lowering the unemployment rate to 4.1%.
Higher bond yields can trigger a stock market correction.

US stocks fell later on Friday a solid December employment report investors’ hopes for more interest rate cuts from the Federal Reserve this year.

The Dow Jones fell 697 points, while the Nasdaq 100 i S&P 500 decreased by more than 1%.

The The economy created 256,000 jobs in December, well above the average economist estimate of 155,000. The unemployment rate unexpectedly fell to 4.1% from 4.2% in November.

The strong jobs report sent bond yields higher, with the 10-year U.S. Treasury yield rising to its highest level since October 2023, hitting an intraday high of 4.79%.

Markets now expect only a 25 basis point rate cut from the Fed this year, according to the CME FedWatch tool, but economists think even that projection is too optimistic.

“Given a resilient labor market, we now believe the Fed’s tapering cycle is over. Inflation remains above target and risks are tilted to the upside. Economic activity is robust. We see little reason for further easing,” Bank of America economists said. in a Friday note.

Wharton professor Jeremy Siegel backed that view in an interview with CNBC on Friday.

“I think the market is really saying that there may not be rate cuts in 2025, and that the 10-year could very easily break above 5%,” Siegel said.

Siegel noted that higher bond yields have historically driven down stock market valuations, so it wouldn’t be surprising if the stock market experienced a correction this year.

Here’s where US indices stood at the closing bell at 4pm on Friday:

Here’s what else happened today:

In commodities, bonds and crypto:

West Texas Intermediate Crude oil rose 3.58% to $76.57 a barrel. Crude Brentthe international benchmark, rose 3.60%, to $79.69 a barrel.
gold rose 0.92% to $2,715.50 an ounce.
The 10-year Treasury yield rose 9 basis points to 4.778%.
Bitcoin rose 2.77% to $95,112.