Stock market today: Dow, S&P 500, Nasdaq sell off amid jobs report surprise, fresh inflation worries

Homebuilder stocks sank as the stronger-than-expected jobs report raised investor concerns that interest rates will remain higher for longer this year.

The SPDR S&P Homebuilders ETF (XHB) fell nearly 2% Friday. DR Horton (DHI), the biggest US homebuilder, along with Lennar (LEN) and PulteGroup (PHM) dropped roughly 1%, 2%, and 1%, respectively.

High mortgage rates have kept many potential homebuyers and sellers on the sidelines. The rate on the 30-year mortgages has been inching closer to 7% for the fourth consecutive week, according Freddie Mac.

Following the latest jobs report, markets are now anticipating no Fed easing before July, per the CME FedWatch Tool. While the Fed doesn’t set mortgage rates, its decisions influence them.

Builders have also been under pressure from rising material and labor costs, with the latest employment picture showing a slowdown in construction job growth. Data from the Labor Department showed that construction firms added 8,000 jobs in December, down from 10,000 jobs added in November.

Oil jumped to as much as $80 per barrel, a three-month high on Friday as traders digested new sweeping energy sanctions by the US against oil producer Russia.

West Texas Intermediate crude (CL=F) rose as much as 4% to rise above $77 per barrel, while Brent crude futures (BZ=F), the international benchmark price briefly hovered just above $80 per barrel.

More than 180 vessels, insurers, and top Russian energy executives, as well as two major oil companies, were all named in the sanctions announced on Friday morning.

“The United States is taking sweeping action against Russia’s key source of revenue for funding its brutal and illegal war against Ukraine,” Treasury Secretary Janet Yellen said in a statement.

Oil prices were already on an upward trend coming into 2025 with traders on edge over President-elect Donald Trump’s policy toward producer Iran. Tehran currently produces more than 3 million barrels of crude per day.

“News continues to filter in about a Trump [administration’s] hard stance on Iran that may come very quickly,” Dennis Kissler, senior vice president at BOK Financial, wrote in a note to clients on Friday.

“Add in the Freezing temps across most of the US, along with shrinking storage numbers, and crude has now become a new ‘fund favorite,'” he added.

A hot jobs report makes it even more likely the Federal Reserve won’t cut rates at its first meeting of the year in January — or for the foreseeable future, as more evidence surfaces of a strong economy, reports Yahoo Finance’s Jennifer Schonberger.

“I think they are done here,” Blake Gwinn, the head of US rates strategy at RBC Capital Markets, told Yahoo Finance on Friday.

“That January cut was already nearly dead before this print,” Gwinn added. “Now we are looking at that March print” — ahead of the Fed’s second meeting of 2025.

Fed officials were already concerned about signs of persistent inflation, citing that as a reason to move cautiously in 2025, along with expectations that the trade and immigration policies of the new Trump administration might provide more upward pressure.

Read more about the Fed’s next policy move here.

Venu Sports, the planned sports streaming service from Disney’s ESPN (DIS), Warner Bros. Discovery (WBD), and Fox (FOXA), will no longer make a debut.

“After careful consideration, we have collectively agreed to discontinue the Venu Sports joint venture and not launch the streaming service,” the three companies said in a joint statement on Friday.

“In an ever-changing marketplace, we determined that it was best to meet the evolving demands of sports fans by focusing on existing products and distribution channels.”

The move caps off a wild week for Venu after FuboTV (FUBO) settled all litigation related to the debut earlier this week. The news and sports streamer had filed an antitrust lawsuit against the platform’s launch last year.

The settlement coincided with an announcement that Fubo, an internet TV bundler, would join forces with Disney’s Hulu + Live TV business. Separately, Disney will roll out an ESPN flagship streaming service service this fall.

Fubo stock popped around 10% in early trading on Friday after surging 250% Monday on the heels of the Disney deal announcement. Fox and WBD shares fell on the news. Disney’s stock traded flat.

The “higher for longer” narrative just got a dose of strength on Friday.

The nonfarm payrolls report showed a very healthy labor market: The US economy added over 250,000 jobs in December, while the unemployment rate fell to 4.1%. On its face, that’s good news. But the fresh data also fed into a dilemma for Wall Street: A strong reading could prompt the Fed to nudge rates higher.

US stocks pulled back at the open as investors digested the final 2024 jobs report, which blew past expectations on hiring, raising more uncertainty when the next rate cut will come.

The Dow Jones Industrial Average (^DJI) slipped roughly 0.5%, while the S&P 500 (^GSPC) shed 0.6%. The tech-heavy Nasdaq Composite (^IXIC) fell 0.9%, leading declines as the major gauges set up for weekly losses.

The US economy added 256,000 jobs in December, the most in nine months and almost 100,000 more than Wall Street had expected as the labor market finished 2024 on a surprisingly high note.

In December, the unemployment rate also fell to 4.1% from 4.2%. Revisions showed the unemployment rate never reached the high of 4.3% reported initially in November.

Friday’s report saw Treasury yields rise as investors continue to push back expectations for Fed rate cuts in 2025, with no cuts expected now before June. Stock futures turned lower following the report.