Wall Street wrapped up the first week of the new year with daily and weekly losses as investors worried about looming U.S. interest-rate hikes and unfolding Omicron news.
The S&P 500 and Nasdaq ended down on Friday, with the latest U.S. jobs report underscoring investor worries that the Federal Reserve will aggressively hike interest rates to fight inflation.
Friday's Labor Department data showed the U.S. jobs market was at or near maximum employment even though employment rose far less than expected in December amid worker shortages.
On Wednesday, minutes of the Fed's Dec. 14-15 policy meeting published showed officials at the U.S. central bank viewed the labor market as "very tight," and signaled the Fed may have to raise rates sooner than expected to curb inflation.
"The investor takeaway is that the labor market continues to be tight despite the headline miss," said Michael Arone, chief investment strategist at State Street Global Advisors in Boston.
Fears of a Hawkish Fed
"Investors are concerned the Fed will be more aggressive than expected.”
Consumer discretionary and and technology sectors led the way lower on the S&P 500 on Friday, while the S&P 500 financials sector and banking index extended recent gains.
Banks have been helped by rising U.S. Treasury yields. The 10-year yield hit its highest since January 2020.
According to preliminary data, the S&P 500 lost 19.00 points, or 0.42%, to end at 4,676.51 points, while the Nasdaq Composite lost 146.29 points, or 0.98%, to 14,934.57. The Dow Jones Industrial Average fell 8.27 points, or 0.02%, to 36,228.20.
Rising cases on the Omicron variant of the coronavirus also caused investor jitters this week.
Investors have been rotating out technology-heavy growth shares and into more value-oriented shares, which they think may do better in a high interest-rate environment.
The S&P 500 energy sector gained sharply during the week.
"Meme stock" GameStop Corp jumped after the video game retailer said it is launching a division to develop a marketplace for nonfungible tokens and establish cryptocurrency partnerships.
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