New York
CNN
 — 

US stocks fell Friday after the December jobs report showed another month of strong employment, complicating the Federal Reserve’s rate-cutting campaign.

The Dow dropped by more than 650 points, or 1.5%; while the S&P 500 fell by 1.6% and the tech-heavy Nasdaq index was lower by 1.9%.

The selloff comes as the economy added 256,000 jobs in December, far outpacing expectations of around 153,000 jobs. While strong job growth signals a healthy economy, it raises the question of how soon the central bank needs to cut interest rates again.

Traders now expect just a 2.7% chance the Fed will cut rates at its policy meeting later this month, according to the CME FedWatch Tool.

Additionally, President-elect Donald Trump’s proposed tariff policies, including reports of declaring a national economic emergency to impose widespread tariffs, has spooked investors, sending bond yields surging.

The yield on the 10-year US treasury spiked to 4.725%, its highest point since fall 2023.

Rising yields signal concern about a stronger-than-expected economy, resurgent inflation and potentially fewer rate cuts in 2025 than anticipated.

“The better-than-expected increase in jobs caused an immediate reaction in both stocks and bonds, with prices moving lower (and bond yields moving higher, as yields move inversely with price), as the Federal Reserve has even less of a reason to cut interest rates this year,” wrote Chris Zaccarelli, chief investment officer at Northlight Asset Management, in a note Friday.

Extreme fear was the sentiment driving the market Friday morning, according to CNN’s Fear and Greed Index.

This story is developing and will be updated.