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U.S. stocks closed lower on Friday as Treasury yields rose following the release of employment data, with the 2-year Treasury yield touching its highest level since January 2025, according to Sina Finance. The S&P 500 fell 0.38% to 7,718.60, the Nasdaq Composite slipped 0.29% to 26,506.99, and the Dow Jones Industrial Average dropped 271.86 points, or 0.51%, to close at 53,414.25.
August nonfarm payrolls increased by 162,000, far above the 53,000 expected by economists surveyed by Dow Jones, while the unemployment rate held at 4.1%, in line with expectations. June and July payroll figures were both revised upward.
According to the CME FedWatch tool, federal funds futures traders now price a 58% probability that the Federal Reserve will raise rates in two weeks, up from 49.4% the prior day.
Among the "Magnificent Seven," Meta Platforms rose 1.00% and Nvidia gained 0.84%, while Amazon fell 0.15%, Alphabet dropped 1.05%, Microsoft declined 2.04%, Apple lost 2.51%, and Tesla tumbled 5.92%.
The Philadelphia Semiconductor Index gained more than 3%. Storage stocks rallied, with SanDisk up more than 11%, SK Hynix up more than 8%, Micron up more than 6% and Western Digital up more than 5%, while Seagate Technology fell more than 6%. In optical communications, Marvell Technology rose more than 7%, Coherent gained more than 6%, Corning added more than 5%, and Lumentum climbed 4%. J
anus Henderson portfolio manager Bradford Smith said the August jobs report was very strong, reflecting a sharp rise in labor-data volatility while slightly increasing the likelihood of a September rate hike. He added that the outlook for Fed policy will depend heavily on upcoming inflation data, noting that after Chair Warsh's hawkish signal at the Jackson Hole meeting last week, the Fed has formed a clear inclination to raise rates if subsequent data fails to show further progress on cooling inflation.
On Thursday, Treasury yields had retreated after Fed Governor Christopher Waller said he "leans toward supporting" keeping rates in the current 3.5%-3.75% target range at the September 15-16 meeting, lifting the three major indexes. For the week, the Dow fell 0.3%, the S&P 500 rose 0.1%, and the Nasdaq Composite gained 0.4%.