U.S. stocks tumbled Friday morning due to December’s strong jobs report and ongoing inflation fears.

Why It Matters

Wall Street set dozens of records last year, but stocks in 2025 have been off to a rough start. A strong stock market is not only good for investors but companies that raise immense amounts of money from it.

What To Know

The three major stock indexes, which track stock market performance, were down Friday morning.

The S&P 500 dipped 0.8 percent in early trading and is set for its fourth losing week in five weeks. Meanwhile, the Dow Jones Industrial Average dropped 267 points (or 0.6 percent) as of 9:35 a.m. Eastern Time, and the Nasdaq composite was down 1.1 percent.

Meanwhile, there were gains in the bond market. The yield on the 10-year Treasury climbed to 4.75 from 4.69, and the yield on the two-year Treasury rose to 4.33 from 4.28 just before the jobs report was released.

Stocks Hit By Jobs Report And Inflation Fears

While a strong jobs report is a good thing for people looking for jobs, it could increase inflation. In a good economy, people have more money to spend, leading to more demand on businesses for goods and services. Prices climb when these businesses can’t produce enough goods and services to meet consumer demand.

Increased inflation could prevent the Federal Reserve from cutting interest rates that are good for Wall Street. Cutting interest rates can boost the economy and prices for investments.

What People Are Saying

Brian Jacobsen, chief economist at Annex Wealth Management, told The Associated Press (AP) that while the overall number of hires in December was much better than experts predicted, “manufacturing is still getting crushed” with job losses.

“The macroeconomy may be fine,” Jacobsen said, “but each individual’s microeconomy could look very different.”

Wells Fargo Investment Institute Senior Global Market Strategist Scott Wren told the AP that the average raises workers are getting is “a data point the Fed wants to see.”

The average raise workers got in December was below 4 percent.

What Happens Next

The Fed signaled last month that it would be making fewer interest rate cuts this year after cutting rates three times in 2024. The fewer rate cuts in 2025 are due to concern about higher inflation, in part, because some officials are taking President-elect Donald Trump‘s threats of tariffs on imports from other countries seriously.

This article includes reporting from The Associated Press.