Dow Off More Than 500 Points After Strong Jobs Report

The Dow Jones Industrial Average (DJIA) tumbled 700 points on Friday, following a stronger-than-expected jobs report for December. The index, which had been trading higher earlier in the day, reversed course after the Labor Department released its monthly employment data. The DJIA closed at 44,765.71, down 1.6% for the day and poised to post losses for the week.

The strong jobs report showed that U.S. employers added 256,000 jobs last month, well above the 155,000 that economists had estimated. The unemployment rate fell to 4.1%, below the 4.2% rate that was expected. The robust labor market data sparked concerns that the Federal Reserve (Fed) may not be in a position to cut interest rates again as inflationary pressures persist. The central bank has trimmed its benchmark rate in each of its last three policy meetings but has warned that the pace of easing will likely slow this year.

The yield on the 10-year Treasury, which is correlated with rate expectations, was at 4.74% recently, up from 4.68% yesterday. The yield jumped as high as 4.79% after the data, its highest level since late 2023. The strong jobs report and rising consumer inflation expectations, as indicated by the University of Michigan's Consumer Sentiment Index, further hit risk appetite in equities.

Shares of mega-cap technology companies were mostly lower on Friday, led by a 3% decline for AI chipmaker Nvidia (NVDA). Apple (AAPL), Microsoft (MSFT), Amazon (AMZN), Alphabet (GOOGL), Tesla (TSLA), and Broadcom (AVGO) also tumbled, while Meta Platforms (META) added about 1%. Palantir (PLTR) and AppLovin (APP), two of the biggest gainers in the U.S. market in 2024, continued their early-year slump, both falling nearly 4%.

Shares of property insurers were down as estimates of damage related to the Los Angeles wildfires continue to rise. The Travelers Companies (TRV) was down 3.5%, leading decliners in the Dow, while Allstate (ALL) and Chubb Limited (CB) fell 5% and 3.5%, respectively. The SPDR S&P Insurance ETF (KIE) was down 2.5%.

Constellation Energy (CEG) jumped 25% following news that it will acquire Calpine for $26 billion. Delta Air Lines (DAL) and Walgreens Boots Alliance (WBA) were up 10% and 25%, respectively, after reporting better-than-expected quarterly results.

Bitcoin was trading at $93,900, up from an overnight low of $91,600 but well below the highs for the week on Monday of around $103,000. Gold futures were up more than 1% at $2,730 an ounce, trading at their highest level in a month, while crude oil futures rose more than 3%.