Wall Street closed lower on Friday after a stronger-than-expected jobs report raised the odds that the U.S. Federal Reserve will raise interest rates at its policy meeting this month. All three major U.S. stock indexes fell amid a broader wave of selling.
The Dow Jones Industrial Average dropped 279.20 points, or 0.54%, to close at 53,398.15. The broader S&P 500 lost 29.58 points, or 0.38%, to finish at 7,718.13, while the tech-heavy Nasdaq Composite fell 78.62 points, or 0.30%, to 26,505.44.
Jobs Report Beats Expectations
The Labor Department's August employment report showed the U.S. economy added 162,000 jobs last month, nearly three times the 56,000 the market had expected. Job figures for June and July were revised upward by a combined 55,000 positions. Labor force participation rose, while the unemployment rate held steady at 4.1%.
A jobs report that beats expectations would normally count as good economic news. But markets read it as a sign that the Fed, which bases its decisions on economic data, will raise rates after this month's policy meeting concludes, in order to stop war-related pressure on energy prices from turning into broader, more entrenched inflation.
Financial markets are now pricing in a 58.4% probability of a 25 basis point rate increase after the Fed's September meeting concludes, up from 49.4% on Thursday, according to the CME Group's FedWatch tool.
Chipmakers Outperform, Software Stocks Lag
Semiconductor stocks were clearly the best performers of the day, though they remain down about 18% for the current quarter. Software and services stocks, which have gained about 25% over the same period, posted the worst performance.
Lululemon Athletica shares fell sharply after the athletic apparel company cut its forecasts for annual profit and revenue.
Credit Rating Firms Slide on VantageScore Order
Shares of U.S. credit rating firms fell after Bill Pulte, director of the Federal Housing Finance Agency, said on Thursday that he had ordered Fannie Mae and Freddie Mac, which were created by the U.S. Congress to support the housing market, to approve the use of the VantageScore credit scoring system by all lenders.
Fair Isaac, TransUnion and Equifax all closed with significant losses.
Dow Winners and Losers
Of the 30 stocks making up the Dow Jones Industrial Average, only 10 moved higher while 20 fell. Caterpillar posted the biggest gain, jumping 1.70% to $813.77, followed by Honeywell International, up 0.95% to $209.61, and Home Depot, up 0.91% to $320.96.
At the other end, the stocks with the steepest losses were Apple, down 2.51%, Microsoft, down 2.04%, and Salesforce, down 1.94%.
U.S. markets will remain closed on Monday for the Labor Day holiday.
