U.S. stocks fell after surprisingly strong jobs data muddied the outlook for Federal Reserve policy.
The Dow Jones Industrial Average fell 271.86 points, or 0.51%, to 53414.25. The S&P 500 declined 29.11 points, or 0.38%, to 7718.60 and the tech-heavy Nasdaq Composite shed 77.07 points, or 0.29%, to 26506.99.
The yield on the policy-sensitive two-year Treasury rose 0.047 percentage point to 4.379%, closing within 2 basis points of a 52-week high. The yield on the 10-year Treasury note rose 0.022 percentage point to 4.783%. The yield on the 30-year bond rose 0.003 percentage point to 5.246%.
American employers added 162,000 workers to payrolls in August, roughly three times the number that economists had forecast. The unexpected rebound in the labor market brightened the outlook for economic growth but also increased pressure on the Fed to take action on inflation.
The jobs report confirmed that "the U.S. economy is in a cyclical upturn, fueled by stimulative policy and optimism emanating from the buildout of AI," economists at brokerage BNP Paribas said in a note to clients. "We remain convinced that the unemployment rate will continue to fall in a supply-constrained labor market and expect this to put upward pressure on wages."
Odds of a rate hike at the upcoming central bank meeting increased to roughly 60% on Fed funds futures markets, rebounding after a hint from a bank governor Thursday that he might support holding rates steady.
The U.S. dollar rose against rivals after the jobs data.
Gold futures, which are particularly sensitive to shifting rate expectations declined by $61.90, or 1.4%, to $4429.80 a troy ounce.
In another sign of inflation risk, oil futures rose 18 cents, or 0.2%, to $91.48 a barrel as the U.S.-Iran war dragged on. The national average price of diesel hit $5.85 a gallon, the highest on record, according to the American Automobile Association.
Stakes are high ahead of producer-price and consumer-price inflation data due next week.
Swedish investment firm EQT agreed to buy a majority stake in London-based insurance broker McGill and Partners for $2 billion from rival Warburg Pincus. The deal comes on the heels of another multibillion dollar insurance brokerage merger, Aon's planned $17 billion acquisition of USI Insurance.
Shares of Tesla fell 5.9% to $354.08 after federal regulators opened an investigation into the electric car maker's steering-wheel-free Cybercab to determine whether it complies with safety standards.
Lululemon shares tumbled 17% to $100.61 after the yogawear retailer cut its sales projection for the second time this year.
Shares of credit-scoring firm Fair Isaac slid 17% to $932.26 and credit bureau Equifax retreated 6.4% to $177.05. Trump administration housing regulator Bill Pulte wrote that he was instructing Fannie Mae and Freddie Mac to allow all lenders to evaluate borrowers based on VantageScore, a service that competes with the FICO score, a longtime standard.
