The S&P 500 plunged 1.6% on Friday after a stronger-than-expected December jobs report heightened fears of a prolonged Federal Reserve rate pause. The Dow Jones dropped 707 points (1.7%), while the NASDAQ Composite also fell 1.6%.
The U.S. economy added 256,000 jobs in December, surpassing expectations of 164,000, while November's figures were revised down to 212,000. The unemployment rate dipped to 4.1% from 4.2%. These robust numbers suggest the Fed may delay rate cuts further. Jefferies noted that current data favors steady rates at the Fed's January and March meetings. Market odds for unchanged rates in January climbed to 98%, with the next potential cut now projected in mid-2024, according to Investing.com's Fed Rate Monitor Tool.
Treasury yields surged, with the 10-year yield reaching 4.765%, the highest since November 2023, dampening growth sectors, particularly technology. Analysts warned that breaching the 5% yield threshold could trigger renewed equity sell-offs.
Chipmakers NVIDIA and AMD led tech declines, with AMD facing pressure from a Goldman Sachs downgrade citing revenue concerns.
Looking ahead, Q4 earnings season kicks off next week. Major banks like JPMorgan Chase and Goldman Sachs are set to report.
Meanwhile, Delta Air Lines soared over 9% on better-than-expected earnings, driven by strong travel demand. Walgreens Boots Alliance jumped 27% after surpassing Q1 earnings estimates and issuing an optimistic annual forecast.
Investors remain cautious as economic data and Fed policy weigh heavily on market sentiment.


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