Stocks fell on Friday after the Federal Reserve downplayed Wall Street’s expectations for more interest rate cuts this year.

gave Dow Jones Industrial Average It fell 696.75 points or 1.63 percent to 41,938.45. gave S&P 500 1.54% down to 5,827.04, while Nasdaq Composite It fell 1.63 percent to 19,161.63. Friday’s losses pushed major benchmarks into the red for 2025.

U.S. payrolls rose 256,000 in December, according to a Dow Jones poll of economists. Expect to see an increase of 155,000.. The unemployment rate, which was estimated at 4.2 percent, fell to 4.1 percent during the month. Production on 10-year Treasury note After the report, it reached its highest level since the end of 2023.

“Good news for the economy but not for the markets, at least for now,” said Scott Wren, senior global market strategist at the Wells Fargo Investment Institute. “However, this unexpected gain relative to the consensus estimate does not change our view that the labor market is likely to contract further in the coming quarters.”

Traders put the odds at 97% that the Fed will tap rates at the end of January, and now think the central bank will keep rates where they are at the March meeting, based on Fed funds futures trading.

The odds of a March cut fell to about 25 percent after the jobs data, down from a 41 percent chance a day earlier, according to CME FedWatch The Fed cut its benchmark rate by a quarter point in December.

Stocks took another leg down on Friday after the University of Michigan’s consumer sentiment index signaled concern on the inflation front. The overall index for January came in at 73.2, missing the Dow Jones estimate of 74. A part of that was a rise in one-year inflation expectations of 2.8 percent to 3.3 percent. Five-year expectations also rose to their highest level since June 2008.

Growth stocks that could suffer the most if rate hikes cause investors to be more conservative leading to session losses. A chip maker Nvidia 3% shed, while AMD And Broadcom lost 4.8% and 2.2% respectively. Palantir There was a shortfall of more than 1 percent.

Small-cap stocks, also sensitive to borrowing rates, fell with Russell 2000 Index A loss of more than 2 percent.

“Rates are moving a little too high, too fast, and equity markets are selling off,” said Adam Trunquist, chief technical strategist at LPL Financial, adding that the recent move in yields could signal a potential pullback for the S&P 500 or Predicts correction.

“But the important thing that gets lost on days like today is why rates are going higher — it’s because the economy is doing better than expected,” he said. “Ultimately, this means better earnings potential, less risk of recession, and it will really command long-term returns compared to selling in today’s market.”

All three major averages posted back-to-back weekly losses. S&P 500 A decrease of 1.9 percent and Nasdaq Composite 30 stocks down 2.3 percent Dow It was down about 1.9 percent on the week.