Strong Jobs Report Sends Stocks into a Tumble
US stocks experienced a wobbly day on Friday following an unexpectedly strong jobs report that suggests the Federal Reserve may raise interest rates to combat inflation.
The Labor Department reported that employers added 162,000 jobs last month, far exceeding the expected 65,000. This has given the Fed more leeway to increase its benchmark short-term interest rate to fight inflation when policymakers meet later this month.
However, a stronger jobs market could make it harder for the Fed to balance supporting job growth with fighting inflation. Raising interest rates can help tame inflation by slowing economic growth, but it may also slow down hiring and economic expansion.
The yield on the 2-year Treasury rose to 4.37% from 4.34%, indicating that investors are expecting a rate hike before the year ends. Wall Street expects the Fed to raise interest rates in an effort to cool inflation, which has been running hot due to rising oil prices and remains above 3%. The Fed's goal is to cool inflation to a target of 2%.