US STOCKS-Wall Street ends lower as blowout job data spooks traders

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US job growth in December exceeds expectations

Walgreens heads for its best day since 1980 after surpassing first-quarter earnings

Constellation Brands falls after cutting fiscal year guidance

A University of Michigan survey showed consumer confidence fell

Indices down: Dow 1.63%, S&P 1.54% and Nasdaq 1.63%

By Johann M Cherian, Sukriti Gupta and Carolina Mandl

Jan 10 (Reuters) – U.S. stocks sold off on Friday, with the S&P 500 erasing its 2025 gains, after an upbeat jobs report stoked fresh inflation fears, reinforcing bets that the Federal Reserve will be cautious in cutting interest rates this year.

Wall Street’s main indices closed their second consecutive week in the red.

“We started the year off on the wrong foot,” said Sam Stovall, market strategist at CFRA Research, commenting on the impact of better-than-expected jobs data on stocks. He added that the environment for stocks could become “quite challenging.”

The Dow Jones Industrial Average fell 696.75 points, or 1.63%, to 41,938.45, the S&P 500 lost 91.21 points, or 1.54%, to 5,827.04 and the Nasdaq Composite lost 317.25 points. , or 1.63%, to 19,161.63.

The domestic-focused small-cap Russell 2000 index also fell 2.27%, entering correction territory, as it was down 10.4% from its Nov. 25 closing high. Wall Street’s fear gauge hit a three-week high on Friday.

A Labor Department report showed that job growth unexpectedly accelerated in December, while the unemployment rate fell to 4.1% as the labor market ended the year on a strong note.

A larger-than-expected increase in employment could translate into faster economic expansion, leading to higher prices. To contain still high inflation, the Federal Reserve could be forced to take a more conservative stance on rate cuts this year.

Traders see the central bank cutting borrowing costs for the first time in June and then holding steady for the rest of the year, according to the CME Group’s FedWatch tool.

Brokerages also revised their Fed rate cut forecasts, and BofA Global Research forecast a possible rate hike.

However, Chicago Federal Reserve President Austan Goolsbee said there is no evidence the economy is overheating again and added that he still hopes it will be appropriate to lower interest rates further.

Pressuring stocks, the 30-year Treasury yield touched 5%, its highest level since November 2023, but fell slightly to 4.966%.

Most of the 11 S&P 500 sectors fell, except for the energy index, which rose 0.34%.

Adding to the bad mood, a University of Michigan survey showed consumer confidence fell to 73.2 in January from the previous month.

Fresh concerns about inflation have gained attention, forcing the Federal Reserve to issue a cautious forecast on monetary easing last month as it anticipates policy changes on trade and immigration under President-elect Donald Trump, who He is expected to take office within 10 days.

On January 15, investors will closely monitor the release of the monthly consumer price index, which could lead to further volatility if it exceeds expectations.

“Markets would sell off significantly because all of a sudden the Fed is probably in a position to not only not cut rates and support the markets, but to raise rates,” said Bryant VanCronkhite, senior portfolio manager at Allspring.

Chip stocks like Nvidia fell about 3%, weighed down by a report that the United States could announce new export regulations on Friday.

Constellation Energy soared 25.16% after agreeing to buy private geothermal and natural gas company Calpine Corp for $16.4 billion, while Constellation Brands fell 17.09% after cutting its annual sales and profit forecasts.

Walgreens Boots Alliance rose 27.55% after reporting an upbeat quarterly profit.

Declining issues outnumbered advancing ones by a ratio of 4.24 to 1 on the New York Stock Exchange and 3.32 to 1 on the Nasdaq.

The S&P 500 recorded 6 new 52-week highs and 32 new lows, while the Nasdaq Composite recorded 39 new highs and 211 new lows.

Volume on US exchanges was 16.24 billion shares, compared to the average of 12.31 billion for the entire session over the last 20 trading days.

(Reporting by Johann M Cherian and Sukriti Gupta in Bengaluru, and Carolina Mandl in New York; Editing by Maju Samuel)