Dow futures tumble 370 points as Treasury yields spike on strong jobs report
Stock futures tumbled after a much hotter-than-expected jobs report sent yields spiking as it likely means the Federal Reserve will halt its rate-cutting campaign.
S&P 500 futures shed 1% while Nasdaq-100 futures dropped nearly 1.2%. Futures tied to the Dow Jones Industrial Average dipped 336 points, or nearly 0.8%.
Wall Street soured on the latest nonfarm payrolls reading, which showed job growth came out much stronger than anticipated. U.S. payrolls grew by 256,000 in December, while economists polled by Dow Jones expect to see an increase of 155,000. The unemployment rate, which was projected to remain at 4.2%, fell to 4.1% during the month.
The market does not expect a rate cut from the central bank at its next meeting later this month, with fed funds futures trading data pricing in only about a 7% chance of a quarter-point cut, according to the CME FedWatch tool.
Earlier this week, the Institute for Supply Management’s services index showed an acceleration in growth in the U.S. services industry in December as well as a rise in prices, which intensified concerns about stickier inflation. Further, private sector companies added fewer jobs than expected last month, according to payroll service provider ADP.
All three of the major averages are on track for weekly losses, with the S&P 500 off 0.4% and the Nasdaq Composite down 0.7%. The 30-stock Dow is on pace for a 0.2% decline on the week. The New York Stock Exchange was closed on Thursday to take part in a national day of mourning for late former President Jimmy Carter.
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