Surging Jobs Report Raises Hopes for Interest Rate Hike

Stocks fell sharply on Friday after a surprisingly strong jobs report raised prospects of an interest rate hike by the Federal Reserve. The S&P 500 dropped 0.4%, while the Dow Jones Industrial Average fell 0.5% and the Nasdaq composite lost 0.3%. The Labor Department reported that employers added 162,000 jobs last month, exceeding forecasts of 65,000.

The strong hiring numbers could give the Fed's policymakers leeway to raise interest rates at their next policy meeting in less than two weeks. 'Today's jobs report does lean toward the Fed increasing rates,' said Terry Sandven, chief equity strategist at U.S. Bank Asset Management Group.

Raising interest rates can help tame inflation, but it can also slow economic growth as borrowing costs rise for households and businesses. The government will release August inflation figures on September 11, just before the Fed's next meeting, which ends on September 16. Inflation has held stubbornly above 3% for most of the year.