• US stocks fell on Friday after a powerful December jobs report reduced hopes for Fed rate cuts in 2025.

• The economy added 256,000 jobs in December, surpassing expectations and lowering the unemployment rate to 4.1%.

• Higher bond yields may result in a stock market correction.

US stocks plunged on Friday after a powerful December jobs report dashed investor hopes of more rate of interest cuts from the Federal Reserve this 12 months.

The Dow Jones plunged 697 points, while the Nasdaq 100 and S&P 500 declined greater than 1%.

The economy added 256,000 jobs in December, well above the common economist estimate of 155,000. The unemployment rate unexpectedly declined to 4.1% from 4.2% in November.

The strong jobs report sparked a surge in bond yields, with the 10-year US Treasury yield surging to its highest level since October 2023, hitting an intraday high of 4.79%.

Markets now expect only one 25-basis point rate of interest cut from the Fed this 12 months, based on the CME FedWatch Tool, but economists think even that projection is simply too rosy.

“Given a resilient labor market, we now think the Fed cutting cycle is over. Inflation is stuck above goal and risks are skewed to the upside. Economic activity is powerful. We see little reason for added easing,” economists at Bank of America said in a Friday note.

Wharton professor Jeremy Siegel backed up that view in an interview with CNBC on Friday.

“I feel really the market is saying possibly no rate cuts in 2025, and that the 10-year could very easily break well above 5%,” Siegel said.

Siegel highlighted that higher bond yields have historically pulled down stock market valuations, so it might be no surprise for the stock market to experience a correction this 12 months.

Here’s where US indexes stood on the 4:00 p.m. closing bell on Friday:

Here’s what else happened today:

In commodities, bonds, and crypto:

• West Texas Intermediate crude oil surged 3.58% to $76.57 a barrel. Brent crude, the international benchmark, was higher by 3.60%, at $79.69 a barrel.

• Gold jumped 0.92% to $2,715.50 an oz.

• The ten-year Treasury yield jumped 9 basis points to 4.778%.

• Bitcoin increased 2.77% to $95,112.

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