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US stocks plunged on Friday as investors digested a final 2024 jobs report that blew past expectations on hiring, raising more uncertainty about the path of interest rates this year.
The Dow Jones Industrial Average (^DJI) sank about 1.4%, or over 500 points, while the S&P 500 (^GSPC) fell 1.4%. The tech-heavy Nasdaq Composite (^IXIC) tumbled 1.7%, leading the sell-off. The three major gauges erased all year-to-date gains with Friday’s pullback.
The December nonfarm payrolls report showed a very healthy labor market: The US economy added over 250,000 jobs in the month, while the unemployment rate fell to 4.1%. That’s the good news. The less good news is that the strong reading could prompt the Fed to keep rates higher for longer, some on Wall Street believe.
The 10-year Treasury yield (^TNX) continued a recent uptick on Friday, moving closer to 4.8% to touch its highest levels since late 2023.
Investors were also hit with fresh data that showed consumers are more pessimistic about future inflation. According to a new reading Friday from the University of Michigan’s consumer sentiment index, year-ahead inflation expectations rose from 2.8% last month to 3.3% this month. The current reading is the highest since May 2024. Long-run inflation expectations also ticked up from 3% last month to 3.3% this month.
In recent days, Fed Chair Jerome Powell and other officials have made it clear they’re slowing down on lowering rates. Amid that tone and after the jobs showing, markets are pricing in no easing before July, per the CME FedWatch Tool.
Meanwhile, investors welcomed a clutch of upbeat earnings to start the year. Walgreens (WBA) posted a first quarter profit beat, a sign the healthcare company’s turnaround efforts are paying off. Shares rose over 20%. Delta (DAL) stock jumped more than 9% after a record year for travel fueled a fourth quarter profit beat and record annual revenue.
But Nvidia (NVDA) shares came under pressure in light of new chip export curbs expected to be announced by the White House soon.
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