U.S. Stocks Fall Sharply After Strong Jobs Report Stokes Fears of Prolonged Fed Pause
U.S. stocks plummeted on Friday, with the S&P 500 Index, Dow Jones Industrial Average, and Nasdaq Composite Index all falling by 1.5%, amid concerns of a prolonged pause by the Federal Reserve after a stronger-than-expected jobs report.
The jobs report showed that nonfarm payrolls rose by 256,000 in December, beating expectations of 164,000, and nudging the unemployment rate down to 4.1%. The surprise report led to a sharp increase in Treasury yields, with the 10-year yield rising to its highest level since November 2023, which weighed on growth sectors such as tech.
The spike in Treasury yields also led to a decline in chip stocks, with NVIDIA Corporation and Advanced Micro Devices among the worst-performing sectors. Goldman Sachs downgraded AMD to neutral from buy, citing revenue growth concerns.
The stocks of several major banks, including JPMorgan Chase, Wells Fargo, Goldman Sachs, and Citigroup, will be in the spotlight next week as the fourth-quarter earnings season begins. Delta Air Lines soared 9% after reporting strong fourth-quarter earnings driven by high travel demand, while Walgreens Boots Alliance rose 27% after reporting first-quarter earnings and revenue above expectations.
Overall, the market’s sharp decline on Friday was a result of the strong jobs report, which led to concerns about the Fed’s future rate decisions and the potential for a prolonged pause.