U.S. stocks dipped on Friday amid a surprising jobs report that will likely cause the Federal Reserve to proceed cautiously with interest rate cuts. All three major indexes—the S&P 500, Dow Jones Industrial Average, and Nasdaq Composite—finished the week in the red.
Benchmark S&P 500 lost 1.54% or 91.21 points to close at 5,827.04 and 0.7% down for the week. Tech-heavy Nasdaq closed at 19,161.63 after a 1.63% or 317.25 points dip, while blue-chip Dow Jones sank by 1.63% or 696.75 points for a 41,938.45 close on Friday. Nasdaq and Dow Jones are down by 0.6% and 1.1%, respectively, for the week.
The slump in the stock market was a direct result of Friday’s U.S. jobs report showing that the economy added 256,000 non-farm payrolls in December compared to 212,000 in the month prior and 155,000 expected by economists. Additionally, the unemployment rate slipped to 4.1% versus predictions of 4.25%.
“Good news for the economy but not for the markets, at least for now,” Scott Wren, senior global market strategist at Wells Fargo Investment Institute, told CNBC. “However, this unexpected gain relative to the consensus projection does not change our view that the labor market is likely to decelerate further in coming quarters.”
The strong labor market, as well as inflation concerns, will likely prompt the Fed to adopt a slower approach to future interest rate cuts. The expectation is that there will be two rate cuts this year and none before June.