US stocks plunged on Friday following a stronger-than-expected jobs report, tempering Wall Street’s hopes for additional interest rate cuts by the Federal Reserve in the near term.
The Dow Jones Industrial Average sank by 592 points, or 1.4%, while the S&P 500 and Nasdaq Composite both dropped 1.3%.
These declines pushed the major indices into negative territory for 2025, underscoring the market’s sensitivity to economic data.
The December employment report revealed US payrolls surged by 256,000, significantly exceeding economists’ forecasts of 155,000.
Meanwhile, the unemployment rate edged down to 4.1%, contrary to expectations of holding steady at 4.2%.
The 10-year Treasury yield soared to its highest level since late 2023 following the report, reflecting heightened investor caution.
The robust data shifted expectations regarding Federal Reserve policy.
According to the CME FedWatch Tool, traders now assign a 97% probability that the central bank will maintain its current rate stance at its January meeting.
The odds of a rate cut in March have also diminished, dropping to 25% from 41% just a day earlier.
Adding to market concerns, the University of Michigan’s consumer sentiment index painted a mixed picture.
The January reading came in at 73.2, falling short of the forecasted 74.
Notably, inflation expectations rose, with the one-year outlook climbing to 3.3% from 2.8%, while five-year projections hit their highest levels since mid-2008.
Growth-oriented stocks bore the brunt of the sell-off, particularly in the technology sector.
Nvidia slid 2.5%, AMD dropped 5.2%, and Broadcom declined 2.1%.
Palantir also lost over 1%. Small-cap stocks, which are sensitive to rising borrowing costs, mirrored the broader downturn as the Russell 2000 index shed more than 2%.
All three major indices are poised for weekly losses.
The S&P 500 is down 1.8%, the Nasdaq Composite has fallen 2.4%, and the Dow Jones is on track for a 1.6% decline for the week.
As the market adjusts to shifting economic conditions, the focus remains on the Federal Reserve’s policy trajectory and its implications for future growth and market stability.
Walgreens shares soar 28% after impressive earnings report
Walgreens Boots Alliance shares jumped nearly 28% on Friday after the company reported fiscal first-quarter earnings and revenue that exceeded analysts’ expectations.
Despite the strong performance, Walgreens posted a net loss of $265 million, or 31 cents per share, compared to a loss of $67 million, or 8 cents per share, in the same period last year.
The increased losses are attributed to the company’s ongoing efforts to cut costs and close underperforming stores as part of its multiyear restructuring plan.
In other market news, Delta Air Lines shares climbed 9% following better-than-expected fourth-quarter results.
The airline reported adjusted earnings of $1.85 per share on $14.44 billion in revenue, surpassing forecasts of $1.75 per share and $14.18 billion in revenue.
Delta also issued robust guidance for the coming year.
Meanwhile, Constellation Energy saw its stock surge 24% after announcing a $26.6 billion acquisition of Calpine, a geothermal and natural gas company.
The company also raised its full-year adjusted earnings outlook above analyst estimates.
On the downside, insurers exposed to California’s wildfire devastation took a hit.
Shares of Allstate and Chubb dropped 7.8% and 4.9%, respectively, while AIG and Travelers also faced declines due to rising insured losses.
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