Dow, S&P 500, Nasdaq sink amid jobs report surprise, fresh inflation worries

Wall Street traders have pushed back the prospects of another rate cut from the Fed, after a surprisingly strong jobs report flashed signs that the economy is humming along.

The Dow Jones Industrial Average (^DJI

) sank about 1.6%, or close to 700 points, while the S&P 500 (^GSPC) also fell 1.5%. The tech-heavy Nasdaq Composite (^IXIC) tumbled 1.6%. The three major gauges erased all year-to-date gains with Friday’s pullback.

The Dow lost 1.1% for the week, the S&P gave up 0.7%, and the Nasdaq decreased by 0.6%.

Meanwhile, The 10-year Treasury yield (^TNX) continued an uptick on Friday, moving closer to 4.8% to touch its highest levels since late 2023.

Some on Wall Street have even rekindled conversations of a potential rate hike this year, especially as shifts in economic policy could reverse or stall progress on easing price pressures.

Fresh jobs data Friday threw the Fed’s interest rate policy back into the spotlight. Signs of a robust labor market shut the door on a rate cut to start the year. And it pushed back expectations of 2025’s first cut from May to July, according to the CME Fedwatch tool.

But strong jobs data is only part of the equation. Next week investors will get a fresh check on inflation. Wednesday will bring CPI data and potentially more signs that a hold on rate cuts will be the Fed’s position for some time.

On the corporate front, the big banks are on deck to post quarterly results. JPMorgan Chase (JPM) Goldman Sachs (GS), Bank of America (BAC), and Morgan Stanley are set to report, offering insights into credit conditions and spending heading into the new year.

Yahoo Finance’s Brent Sanchez has a graphical breakdown of what to watch next week:

TikTok is having its day in court. The Chinese-owned social media company delivered oral arguments on Friday in a bid to overturn the law that is set to ban the company from operating in the US unless it finds a new owner.

The high court could issue a decision before Trump is sworn into office on Jan. 20 or put the law on hold.

In initial reports of the oral arguments, several Supreme Court justices seemed more sympathetic to the government’s case, that TikTok presents a national security threat because of its ties to the Chinese government. And justices appeared to cast doubt on TikTok’s position, that the company is being singled out in an assault on free speech protections.

A ruling from the Supreme Court to uphold the ban could be a boon for TikTok’s social media rivals by redistributing advertising dollars to platforms like Meta (META).

Here are some of the stocks leading Yahoo Finance’s trending tickers page during afternoon trading on Friday:

Delta Air Lines (DAL): Shares of the major airline rose after exceeding analyst expectations for both revenue and earnings in its fiscal fourth quarter, capping off a record-breaking revenue year in 2024. Delta shares rose more than 8% Friday afternoon.

Nvidia (NVDA): The AI chipmaker fell Friday along with other chip names after a December jobs report pushed out expectations for additional rate cuts from the Federal Reserve and ahead of an expected chip export restriction from the Biden administration. Nvidia stock fell more than 2% in afternoon trading, while industry peer AMD (AMD) fell over 4%.

Meta (META): The social media company rose 3% Friday afternoon following the conclusion of oral arguments before the Supreme Court on the fate of TikTok’s US operations. The competitor to Facebook and other US-based social media sites is on track to be banned Jan. 19 unless its Chinese parent company sells TikTok. Initial reporting on the Supreme Court case indicated a majority of justices appeared ready to uphold the ban.

Walgreens Boots Alliance (WBA): The pharmacy chain surged nearly 30% Friday afternoon after beating Wall Street estimates on its adjusted earnings per share and sales for the first quarter of fiscal year 2025, even as questions remain about its future as a public company. The company reported $39.5 billion in revenue for the quarter, up 7% from the same quarter last quarter and above Bloomberg consensus estimates of $37.3 billion.

A surprisingly strong December Jobs report dashed hopes that the Fed will cut interest rates anytime soon as signs of a robust economy feed into a posture of “higher for longer” at the US central bank.

The Dow Jones Industrial Average (^DJI) sank about 1.6%, or over 600 points, while the S&P 500 (^GSPC) fell 1.6%. The tech-heavy Nasdaq Composite (^IXIC) tumbled 1.8%. The three major gauges erased all year-to-date gains with Friday’s pullback.

Odds of a rate cut in March fell to around 25% following the data release, down from about 44% a day ago, according to the CME Fedwatch tool.

Fed officials have already expressed concern with sticky inflation, giving them more reasons to approach interest rate policy with caution. Alongside pricing pressure expectations from the trade and immigration policies of the incoming Trump administration, the latest data likely spells a longer period with no rate cuts.

Homebuilder stocks sank as the stronger-than-expected jobs report raised investor concerns that interest rates will remain higher for longer this year.

The SPDR S&P Homebuilders ETF (XHB) fell nearly 2% Friday. DR Horton (DHI), the biggest US homebuilder; Lennar (LEN); and PulteGroup (PHM) dropped roughly 1%, 2%, and 1%, respectively.

High mortgage rates have kept many potential homebuyers and sellers on the sidelines. The rate on 30-year mortgages has been inching closer to 7% for the fourth consecutive week, according Freddie Mac.

Following the latest jobs report, markets are now anticipating no Fed easing before July, per the CME FedWatch Tool. While the Fed doesn’t set mortgage rates, its decisions influence them.

Builders have also been under pressure from rising material and labor costs, with the latest employment picture showing a slowdown in construction job growth. Data from the Labor Department showed that construction firms added 8,000 jobs in December, down from 10,000 jobs added in November.

Oil jumped to as much as $80 per barrel, a three-month high on Friday as traders digested new sweeping energy sanctions by the US against oil producer Russia.

West Texas Intermediate crude (CL=F) rose as much as 4% to rise above $77 per barrel, while Brent crude futures (BZ=F), the international benchmark price briefly hovered just above $80 per barrel.

More than 180 vessels, insurers, and top Russian energy executives, as well as two major oil companies, were all named in the sanctions announced on Friday morning.

“The United States is taking sweeping action against Russia’s key source of revenue for funding its brutal and illegal war against Ukraine,” Treasury Secretary Janet Yellen said in a statement.

Oil prices were already on an upward trend coming into 2025 with traders on edge over President-elect Donald Trump’s policy toward producer Iran. Tehran currently produces more than 3 million barrels of crude per day.

“News continues to filter in about a Trump [administration’s] hard stance on Iran that may come very quickly,” Dennis Kissler, senior vice president at BOK Financial, wrote in a note to clients on Friday.

“Add in the Freezing temps across most of the US, along with shrinking storage numbers, and crude has now become a new ‘fund favorite,'” he added.

A hot jobs report makes it even more likely the Federal Reserve won’t cut rates at its first meeting of the year in January — or for the foreseeable future, as more evidence surfaces of a strong economy, reports Yahoo Finance’s Jennifer Schonberger.

“I think they are done here,” Blake Gwinn, the head of US rates strategy at RBC Capital Markets, told Yahoo Finance on Friday.

“That January cut was already nearly dead before this print,” Gwinn added. “Now we are looking at that March print” — ahead of the Fed’s second meeting of 2025.

Fed officials were already concerned about signs of persistent inflation, citing that as a reason to move cautiously in 2025, along with expectations that the trade and immigration policies of the new Trump administration might provide more upward pressure.

Read more about the Fed’s next policy move here.

Venu Sports, the planned sports streaming service from Disney’s ESPN (DIS), Warner Bros. Discovery (WBD), and Fox (FOXA), will no longer make a debut.

“After careful consideration, we have collectively agreed to discontinue the Venu Sports joint venture and not launch the streaming service,” the three companies said in a joint statement on Friday.

“In an ever-changing marketplace, we determined that it was best to meet the evolving demands of sports fans by focusing on existing products and distribution channels.”

The move caps off a wild week for Venu after FuboTV (FUBO) settled all litigation related to the debut earlier this week. The news and sports streamer had filed an antitrust lawsuit against the platform’s launch last year.

The settlement coincided with an announcement that Fubo, an internet TV bundler, would join forces with Disney’s Hulu + Live TV business. Separately, Disney will roll out an ESPN flagship streaming service service this fall.

Fubo stock popped around 10% in early trading on Friday after surging 250% Monday on the heels of the Disney deal announcement. Fox and WBD shares fell on the news. Disney’s stock traded flat.

The “higher for longer” narrative just got a dose of strength on Friday.

The nonfarm payrolls report showed a very healthy labor market: The US economy added over 250,000 jobs in December, while the unemployment rate fell to 4.1%. On its face, that’s good news. But the fresh data also fed into a dilemma for Wall Street: A strong reading could prompt the Fed to nudge rates higher.

US stocks pulled back at the open as investors digested the final 2024 jobs report, which blew past expectations on hiring, raising more uncertainty when the next rate cut will come.

The Dow Jones Industrial Average (^DJI) slipped roughly 0.5%, while the S&P 500 (^GSPC) shed 0.6%. The tech-heavy Nasdaq Composite (^IXIC) fell 0.9%, leading declines as the major gauges set up for weekly losses.

The US economy added 256,000 jobs in December, the most in nine months and almost 100,000 more than Wall Street had expected as the labor market finished 2024 on a surprisingly high note.

In December, the unemployment rate also fell to 4.1% from 4.2%. Revisions showed the unemployment rate never reached the high of 4.3% reported initially in November.

Friday’s report saw Treasury yields rise as investors continue to push back expectations for Fed rate cuts in 2025, with no cuts expected now before June. Stock futures turned lower following the report.