Investing.com – Wall Street tumbled after US bonds yields soared following a strong US jobs report showing wage growth improved fuelling expectations for a faster pace of inflation, and monetary policy tightening.
The Dow Jones Industrial Average closed lower at 25,520. The S&P 500 closed 2.13% lower, while the Nasdaq Composite closed at 7240.95, down 1.96%.
The Labor Department said Friday, U.S. non-farm payrolls rose by 200,000 jobs in January. That beat economists’ forecasts for 184,000 new jobs. While unemployed remained at unchanged on the prior month at 4.1%.
Wage growth met expectations rising 0.3%, and was revised upward to 0.3% for December, triggering investor expectations that tighter labor markets could finally be starting to boost wage price pressures. This may spur inflation growth which could force the Fed to raise rates by more than what markets currently anticipate.
The 10-year Treasury yield rose above 2.8%, as some market participants expect the Federal Reserve to raise rates four times this year. BNP Paribas revised upward its assessment of core PCE inflation, the Fed’s preferred measure of inflation, to 2.2% from 2.0% previously, and said it expects the Fed to raise rates four times in 2018 compared to a prior estimate of just three hikes.
Also weighing on sentiment for riskier assets were mixed earnings by tech firms reported Thursday as Apple (NASDAQ:AAPL) missed iPhone sales growth estimates, while Alphabet (NASDAQ:GOOGL) missed revenue estimates. Amazon (NASDAQ:AMZN), however, closed about 3% higher after reporting earnings that beat on both the top and bottom lines.
Energy, meanwhile, was the worst performing sector as crude oil prices settled lower for the week amid signs of growing domestic output.
'Bulls and Bears' on Wall Street
Chevron Corporation (NYSE:CVX) down 5.6%, Exxon Mobil Corporation (NYSE:XOM) down 5.1%, and Goldman Sachs (NYSE:GS) down 4.5%, were among the worst Dow performers of the session.