NEW YORK (AP) — U.S. stocks are falling sharply on those concerns. Friday’s good news in the job market May be very good And keeping it down proves bad for Wall Street. Inflation And Interest rate high

The S&P 500 was down 1.3% in afternoon trade and on track for its fourth losing week in the past five. The Dow Jones Industrial Average was down 582 points, or 1.4 percent, and the Nasdaq Composite was down 1.4 percent as of 1:14 p.m. ET.

Stocks took their cue from the bond market, where U.S. employers added more jobs to their payrolls than economists expected, according to a report.

Such strength in job search is certainly good news for job seekers. But it can also put upward pressure on inflation. Damaging the overall economy. That in turn could prevent the Federal Reserve from delivering the interest rate cuts that Wall Street favors. Low rates can not only hurt the economy, but also increase the cost of investment.

The Fed has already indicated that it is likely to cut rates less than expected this year due to concerns about higher inflation. That’s partly because few officials are taking the prospect seriously. Tariff and other policies coming from President-elect Donald Trump Which can increase inflation.

To be sure, Friday’s jobs report may not be as strong as it seems on the surface. Brian Jacobson, chief economist at Annex Wealth Management, said the hiring total for the month blew past expectations, but “manufacturing is still crushing.”

“The macro economy can be fine,” he said, “but each individual’s micro economy can be very different.”

The raises workers are getting may also be a more important data point for the Fed, and average hourly earnings growth last month was less than 4%. “That’s what the Fed wants to see,” according to Scott Wren, senior global market strategist at the Wells Fargo Investment Institute.

Key moves after the release of the jobs report helped Treasury yields return some of their early bursts. But preliminary findings from a separate report later in the morning highlighted the problem when it suggested that US consumers about More are becoming pessimistic about where inflation is headed.

Consumers expect inflation to be 3.3% next year, up from last month’s expectation of 2.8%, the highest reading since May in a University of Michigan survey. According to Juan Hsu, director of consumer surveys, expectations are worsening across the board, especially for households with lower incomes and among political independents.

The problem for Wall Street is that traders were banking on an impending rate cut by the Fed when they sent U.S. stock indexes to dozens of records last year. Fewer-than-expected cuts this year will mean either stock prices will have to fall or companies’ profits will grow more strongly to make up for it.

Stocks viewed as the most expensive may feel the most pressure from higher yields. It focuses on the big tech stocks that have seen a frenzy around their valuations Artificial intelligence technology. Apple fell 2.5 percent, and Nvidia The two top weights on the S&P 500 fell 2.6%.

Small companies can also feel a big hit from higher interest rates because many need to borrow money to grow. The Russell 2000 index of smaller stocks fell 2.3 percent, with losses worse than other indexes.

Insurance companies were also under pressure. Forest fires keep burning. In the Los Angeles area. Many of the homes that were destroyed were in high-end neighborhoods with a typical home value of more than $3 million. Such high-cost losses can eat into insurers’ profits. Allstate fell 6.7 percent, Chubb 4.1 percent and Travelers 4.3 percent.

Delta Air Lines was able to fly 9.4 percent more on Friday because it Delivered a strong profit report More than analysts expected for the last three months of 2024. The airline said it is seeing strong demand for travel, which picked up late last year, and expects that to continue through 2025.

Big banks will start reporting their results for the end of 2024 next week, as earnings season is in full swing.

In the bond market, the yield on the 10-year Treasury initially rose to 4.78 percent after the release of the jobs report, having rebounded to 4.76 percent from 4.68 percent late Thursday. In September, it was down from 3.65 percent, a key move for the bond market.

The yield on the two-year Treasury, which is moving more closely with expectations of a near-term Fed action, rose to 4.37% from 4.27% late Thursday.

Friday’s jobs report means traders see it as a near certainty that the Fed will not cut interest rates at its next meeting later this month. It will be the first time it has tapped interest rates after three straight cuts.

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AP Business Writers Matt Ott and Elaine Kurtenbach contributed.