NEW YORK, Jan. 10 (Xinhua) -- U.S. stocks ended lower on Friday after a stronger-than-expected December jobs report reduced the likelihood of future Federal Reserve interest-rate cuts.
The Dow Jones Industrial Average fell by 696.75 points, or 1.63 percent, to 41,938.45. The S&P 500 sank 91.21 points, or 1.54 percent, to 5,827.04. The Nasdaq Composite Index shed 317.25 points, or 1.63 percent, to 19,161.63.
Ten of the 11 primary S&P 500 sectors ended in red, with real estate and financials leading the laggards by dropping 2.46 percent and 2.45 percent, respectively. Meanwhile, energy bucked the trend by adding 0.34 percent.
The nonfarm payrolls data revealed the economy added 256,000 jobs last month, far exceeding the consensus estimate of 155,000. The unemployment rate also edged down to 4.1 percent, surprising analysts who anticipated it would remain steady at 4.2 percent.
The robust labor market data fueled a surge in bond yields and strengthened the dollar, but it weighed on equities as traders reassessed expectations for monetary policy. The 10-year Treasury yield continued a recent uptick on Friday, moving closer to 4.8 percent to touch its highest levels since late 2023.
Investors faced additional headwinds Friday as new data revealed growing consumer pessimism regarding inflation. The University of Michigan's consumer sentiment index showed that year-ahead inflation expectations climbed to 3.3 percent in January, up from 2.8 percent in December. This marks the highest reading since May 2024, signaling mounting concerns about near-term pricing pressures.
According to LSEG data, market participants now forecast only 25 basis points of rate cut from the Fed in 2025, down from earlier projections of more significant easing.
"The good news is starting to once again sound like bad news. Longer end rates are climbing higher, odds of a 2025 Fed cut are rapidly declining and further dollar strength has potential to be a headwind for U.S. companies," said Lara Castleton, U.S. head of portfolio construction and strategy at Janus Henderson Investors.
However, Fed Bank of Chicago President Austan Goolsbee said the latest jobs report suggests the labor market is stabilizing at full employment and is not a sign of an overheating economy.
"I do not see job market as a source of inflation... 12 to 18 months from now rates would be a fair bit lower if current expectations are met," he added.
Despite broader market pressures, investors found some relief in a wave of positive earnings reports to kick off the year. Walgreens Boots Alliance led the charge, with shares surging 27.55 percent after the healthcare giant delivered a first-quarter profit beat. Delta climbed more than 9 percent after the airline reported a record year for travel in 2024, propelling a fourth-quarter profit beat and the highest annual revenue in its history.
Investors also monitor the financial implications of the devastating Los Angeles fires. Insurance and utility stocks were under pressure as concerns mounted over potential liabilities and costs associated with the disaster. ■