Stocks Slide as Strong Jobs Report Stokes Rate Hike Fears

U.S. stocks declined on Friday after the government released a surprisingly strong jobs report that may increase chances of an interest rate hike by the Federal Reserve later this month.

The S&P 500 fell 0.4%, while the Dow Jones Industrial Average dropped 0.5% and the Nasdaq composite gave back 0.3%. The yields on the 10-year Treasury rose to 4.78% from 4.77% late Thursday, with the yield on the 2-year Treasury rising to 4.37% from 4.34%.

The Labor Department reported that employers added 162,000 jobs last month, exceeding the forecast of 65,000 and raising concerns about inflation. The unemployment rate held steady at 4.1%. Fed Chair Kevin Warsh said last week that inflation had not shown sufficient improvement and that the central bank might have 'more work to do', indicating a possible interest rate increase.

Christopher Waller, Federal Reserve governor, stated that if new data shows cooling inflation, he would be inclined to keep the benchmark interest rate unchanged. However, if the data indicates hotter inflation, he would consider raising rates.