US stocks slump after strong payrolls; Nasdaq sinks 1.5%

U.S. stocks fell sharply Friday, after a stronger than expected jobs report raised concerns about a slower pace of interest rate cuts in 2025.

At 10:43 ET (15:43 GMT), Dow Jones Industrial Average fell 574 points, or 1.4%, S&P 500 dropped 77 points, or 1.3%, and NASDAQ Composite slipped 285 points, or 1.5%.

Wall Street indexes were nursing a choppy start to 2025, as hawkish signals from the Federal Reserve and uncertainty over President-elect Donald Trump’s policies weighed on risk appetite.  Nonfarm payrolls surprises to upside 

The US economy unexpectedly added more jobs in December versus the prior month, according to a monthly report that could factor into how the Federal Reserve approaches possible interest rate cuts.

Nonfarm payrolls increased by 256,000 jobs last month after rising by an downwardly revised 212,000 in November, the Labor Department's Bureau of Labor Statistics said. Economists had forecast an uptick of 164,000 roles.

The unemployment rate fell to 4.1%, below November's pace of 4.2%.

Strength in the labor market is expected to give the Fed even more headroom to delay cutting interest rates this year. Fears of a labor market slowdown were one of the main motivations for the Fed cutting rates by 1% in 2024.  Q4 earnings season kicks off next week 

The fourth-quarter earnings season is set to begin in earnest next week, with several major banks, including JPMorgan Chase (NYSE:JPM ), Wells Fargo (NYSE:WFC ), Goldman Sachs (NYSE:GS ) and Citigroup (NYSE:C ) set to report on Wednesday.

Elsewhere, Delta Air Lines (NYSE:DAL ) stock soared over 5% after the carrier reported fourth-quarter earnings that surpassed analyst estimates, driven by strong travel demand. 

Walgreens Boots Alliance (NASDAQ:WBA ) stock rose 20% after the pharmacy retailer reported first-quarter earnings and revenue above analyst expectations, and delivered an upbeat annual forecast. Crude set for another positive week 

Oil prices rose Friday, on track for a third straight week of gains, with demand receiving a boost from severe winter conditions in parts of the United States and Europe.

By 09:35 ET, the US crude futures (WTI) climbed 5.2% to $77.73 a barrel, while the Brent contract rose 4.9% to $80.71 per barrel.

Both contracts are on course for gains around 4%, the third consecutive week of gains.

Many parts of central and eastern United States are expected to experience below-average temperatures over the next few days, while many regions in Europe have also been hit by extreme cold, which is likely to increase demand for heating.

(Ambar Warrick contributed to this article.)

Source: Investing.com