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," said economists at brokerage BNP Paribas, 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.
