The stock market dropped sharply Friday, with the Dow Jones Industrial Average falling 697 points (1.6%) and the S&P 500 and Nasdaq each declining 1.5%. The downturn came despite positive economic news showing U.S. employers added 256,000 jobs in December and the unemployment rate dipped to 4.1%.
The market reacted negatively because strong economic data stoked fears the Federal Reserve might delay further interest rate cuts. Investors worry that fewer rate cuts could slow momentum in equities, as higher interest rates generally reduce stock market appeal. Analysts also pointed to rising inflation expectations, with consumers now projecting a 3.3% inflation rate for the coming year.
The bond market also faced challenges, with 10-year Treasury yields climbing to nearly 4.8%, pushing bond prices lower. In contrast, Bitcoin rose about 3% but remains far below peak levels. Overall, the day’s results left major stock indexes in negative territory for 2025.
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