U.S. stocks experienced a significant downturn on Friday, as broad-based selling pressure arose following the release of robust non-farm payroll data. This led to concerns that the Federal Reserve might maintain interest rates at their current levels or decelerate the pace of reductions. Additionally, rising bond yields further exacerbated the situation.
All major stock indices closed significantly lower. The Dow concluded the day with a decline of 696.75 points, a decrease of 1.63%, closing at 41,938.45. The S&P 500 dropped by 91.21 points, or 1.54%, to settle at 5,827.04, while the Nasdaq saw a reduction of 317.25 points, equating to 1.63%, ending at 19,161.62.
According to data from the Labor Department, U.S. non-farm payroll employment experienced a notable increase by 256,000 in December, following an upwardly revised rise of 212,000 jobs in November. Economists had forecast an employment increase of 160,000 jobs compared to the originally reported 227,000 in the previous month.
The U.S. unemployment rate slightly decreased to 4.1% in December from November's 4.2%, while projections had anticipated it remaining steady.
Bill Adams, Chief Economist for Comerica Bank, commented, "The Fed moderated its pace of easing in late 2024, as the unemployment rate ticked up and private sector hiring showed signs of slowing. The strong jobs report for December indicates that there is no urgency to further relax their policy."
He further noted, "Concerns linger at the Fed about potential economic acceleration driven by additional fiscal stimulus, increased tariffs, and tighter immigration controls, all of which could stoke inflation and exacerbate labor market constraints, supporting a cautious approach to further rate cuts."
Preliminary findings from the University of Michigan revealed a slight decline in consumer sentiment in January, with the index dipping to 73.2 from December's 74.0. Economists had predicted a rise to 74.5.
Among individual stocks, Oracle, PayPal, eBay, Advanced Micro Devices, Intel, Morgan Stanley, Goldman Sachs, MetLife, and American Express saw declines between 3 and 6 percent. Meanwhile, Verizon, Salesforce, Caterpillar, PepsiCo, Citigroup, Bank of America, General Motors, Wells Fargo, Apple, Accenture, Procter & Gamble, and Mastercard faced losses of 2 to 3 percent.
Conversely, Walgreens Boots Alliance shares surged nearly 28 percent, following the announcement of $265 million in earnings for the first quarter, a substantial increase from $67 million in the previous year. Delta Air Lines rose 9 percent, although its first-quarter earnings fell. Nonetheless, the company projected a significant increase to over $7.35 per share in 2025, marking a year-over-year growth of more than 10% based on normalized 2024 earnings per share.
Whirlpool, Alaska Air, United Airlines Holdings, American Airlines, Eli Lilly, Walmart, Target, and Home Depot also achieved solid gains.
Internationally, stock markets across the Asia-Pacific region generally trended downward on Friday. Japan's Nikkei 225 Index decreased by 1.1 percent, and China's Shanghai Composite Index dropped by 1.3 percent.
European markets mirrored this downtrend, with Germany's DAX Index falling by 0.5 percent, the U.K.'s FTSE 100 Index declining by 0.86 percent, and France's CAC 40 Index slipping by 0.79 percent.
In the bond market, treasuries experienced a notable decrease following the jobs report, resulting in a rise of 7.0 basis points in the yield on the benchmark ten-year note, bringing it to 4.751 percent.
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