US stock prices on Wall Street end lower as jobs data spooks investors

(Repeats without changes to the text)

December US job growth exceeds expectations

Walgreens posted its best day since 1980 after posting a first-quarter profit margin

Constellation Brands declines after adjusting FY forecasts

Research from the University of Michigan showed that consumer confidence was declining

Indexes disabled: 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 2025 gains, after a positive jobs report sparked new inflation fears, reinforcing expectations that the Federal Reserve will be cautious in cutting rates this year .

Wall Street’s major indices ended their second week in a row in the red.

“We started the year 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 equities 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 domestically focused small-cap Russell 2000 index also fell 2.27% and entered correction territory as the index fell 10.4% from its Nov. 25 high. Wall Street’s fear gauge hit a three-week high on Friday.

A report from the Department of Labor 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.

Higher-than-expected job growth could translate into faster economic expansion, leading to a rise in prices. To control still high inflation, the Fed could be forced to take a more conservative stance on rate cuts this year.

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

Brokers have also revised their forecasts for the Fed’s rate cut, with BofA Global Research predicting a potential rate hike.

However, Chicago Fed Chairman Austan Goolsbee said there is no evidence the economy is overheating again. He added that he still expects it will be appropriate to cut rates further.

Pressure on stock prices pushed the yield on the 30-year government bond to reach 5% – the highest level since November 2023, but fell slightly to 4.966%.

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

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

New inflation concerns are in the spotlight, forcing the Fed to make a cautious forecast on monetary easing last month as it anticipates policy changes on trade and immigration under newly elected President Donald Trump, who is expected to leave in ten days to come into power.

On January 15, investors will be closely watching the release of the monthly consumer price index, which could lead to further volatility if it comes in higher than expected.

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

Chip stocks such as Nvidia fell about 3%, pressured by reports that the US could announce new export rules as early as Friday.

Constellation Energy rose 25.16% after agreeing to acquire private natural gas and geothermal company Calpine Corp for $16.4 billion, while Constellation Brands fell 17.09% after cutting annual revenue and profit expectations.

Walgreens Boots Alliance rose 27.55% after reporting positive quarterly profit.

Declining issues outnumbered advancers by a 4.24-to-1 ratio on the NYSE and by a 3.32-to-1 ratio on the Nasdaq.

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

Volume on U.S. exchanges was 16.24 billion shares, compared to the full-session average of 12.31 billion over the past 20 trading days.

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