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Stocks tumbled Friday after two new U.S. economic data reports dampened Wall Street expectations for Federal Reserve interest rate cuts later in 2025.
The Dow Jones Industrials crumbled 626.1 points, or 1.5%, to 42,008.80.
The much-broader index dropped 99.57 points, or 1.7%, to 5,818.68
The NASDAQ Composite plummeted 421.32 points, or 2.2%, to 19,057.56. The three major averages are on pace for a second straight weekly loss.
Growth stocks that could be hurt the most if a spike in rates causes investors to get more conservative led the losses. Nvidia shed more than 3.5%. Palantir was off by about 4%.
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. The yield on the 10-year Treasury note spiked to its highest level since late 2023 after the report.
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 4.73% from Wednesday’s 4.68%. Treasury prices and yields move in opposite directions.
Oil prices regained $3.19 to $77.11 U.S. a barrel.
Prices for gold barreled ahead $31.70 an ounce to $2,722.50 U.S.
