Major US stock indices declined on Friday following stronger-than-expected August non-farm payroll data, which heightened market expectations of a Federal Reserve interest rate hike.
Equities retreat on jobs beat
The Dow Jones fell 271.86 points, or 0.51 percent, to finish Friday trading at 53,414.25, while the S&P 500 slipped 0.38 percent to close at 7,718.60 and the Nasdaq lost 0.29 percent to end at 26,506.99. Over the week, the Dow Jones dropped 0.3 percent, but the S&P 500 rose 0.1 percent and the Nasdaq gained 0.4 percent.
Employers added 162 thousand persons to non-farm payrolls in August 2026, well above the 53 thousand persons projected in a Dow Jones survey. The unemployment rate held at 4.1 percent. In addition, employment figures for June and July were revised upward.
Rate hike expectations rise
Following the employment release, US two-year Treasury yields rose to their highest level since January 2025. CME FedWatch data indicated that the market-implied probability of a Fed rate hike rose to 58 percent, up from 49.4 percent the previous day.
Stocks fell across the board.
Federal Reserve Governor Christopher Waller previously indicated support for keeping the policy rate at 3.5 percent to 3.75 percent at the September 15-16 meeting. Bradford Smith, Portfolio Manager at Janus Henderson Investors, noted that following hawkish remarks by Chairman Warsh at Jackson Hole the previous week, there is a clear bias in the Fed to take action if incoming data does not demonstrate further progress in the disinflation process.
The US federal funds rate stood at 3.63 percent on 4 September 2026.
Related: Wall Street opens mixed as August payrolls beat forecasts · Wall Street opens higher as oil gains, bonds ease
Data: S&P Dow Jones Indices · FRED — St. Louis Fed · Nasdaq
