Stocks fall after a surprisingly strong jobs report raises prospects of an interest rate hike

stocks fell and Treasury bond yields mostly rose Friday after the government reported that employers unexpectedly added 162,000 jobs last month.The surprise increase in hiring could give the Federal Reserve leeway to raise its benchmark short-term interest rate to fight inflation when central bank policymakers meet later this month.“Today’s jobs report does lean toward the Fed increasing rates," said Terry Sandven, chief equity strategist at U.S. Bank Asset Management Group, noting, however, that a rate hike is "not a foregone conclusion.”The S&P 500 fell 0.5%.. The Dow Jones Industrial Average was down 282 points, or 0.5%, as of 2:07 p.m.

The Nasdaq composite fell 0.5%.Gains in technology stocks helped limit declines in other sectors. Nvidia rose 0.7%, Advanced Micro Devices added 3.4%, Sandisk jumped 10.3% and Micron Technology gained 4.1%.Lululemon Athletica sank 17.3% after the retailer reported quarterly revenue that fell short of analysts' estimates and lowered its fiscal full-year outlook again.Markets were mixed in Europe and Asia.U.S. government bond yields, which had eased the last couple of days, mostly rose.The yield on the 10-year Treasury, which influences mortgage rates, rose to 4.78% from 4.77% late Thursday.

It has been rising steadily throughout the year and was as low as 4.20% at the beginning of 2026.The yield on the 2-year Treasury, which closely tracks expectations for Federal Reserve moves on interest rates, rose to 4.37% from 4.34%. It remains significantly higher for the year, though, and was as low as 3.50% at the beginning of 2026.Wall Street expects the central bank to raise interest rates before the year ends in an effort to cool inflation, which has been running hot due to rising oil prices amid the U.S. war with Iran and remains well above 3%.

The Fed has a stated goal of cooling inflation to a target of 2%.The Labor Department reported that hiring in August far exceeded the 65,000 forecasters had expected, according to a poll by FactSet. Labor Department revisions also looked good, adding 55,000 to June and July payrolls. The unemployment rate held steady at 4.1%.The stronger jobs market could make matters more complicated for the Fed, which has to balance supporting job growth with fighting inflation.

Raising interest rates can help tame inflation by slowing economic growth.“Given the strength of the payro… The Dow Jones Industrial Average was down 245 points, or 0.5%, as of 12:48 p.m. The Nasdaq composite fell 0.2%.Gains in technology stocks helped limit declines in other sectors.

Nvidia rose 1.4%, Advanced Micro Devices added 4.2%, Sandisk jumped 10.4% and Micron Technology gained 4.6% .Lululemon Athletica sank 17.4% after the retailer reported quarterly revenue that fell short of analysts' estimates and lowered its fiscal full-year outlook again.Markets were mixed in Europe and Asia.U.S.