US STOCKS-S&P 500, Dow slide after jobs report fuels rate-hike bets

The benchmark S&P 500 and the blue-chip Dow indexes slipped on Friday after a stronger-than-expected jobs report prompted investors to ramp up bets on interest rate hikes later this ‌month. The data could give the Federal Reserve more room to focus on inflation, especially as Chair Kevin Warsh has indicated that controlling price pressures is his top priority.

A Labor Department report showed the U.S. economy added 162,000 jobs in August, compared with estimates of 56,000, according to economists polled by Reuters. The unemployment rate stood at 4.1% last ‌month, as expected. Traders added to expectations of an interest rate hike at the central bank's September 15-16 meeting, with short-term interest-rate futures now implying a 65% ‌chance of an increase, up from 55% before the report.

"This is obviously a very volatile report, but it does mean that at this point the Fed's focus is going to be on inflation," said Josh Stevens, chief investment officer at CresAlta Investment Management. "The argument about the labor market remaining weak has some validity, but if employment shows strength in next few months, we'd see a pickup in wages, ⁠and that ​would get the Fed's attention."

Attention now turns to ⁠next week's inflation readings, with the Labor Department set to release CPI and PPI data that could prove pivotal to the Fed's decision. At 9:44 a.m. ET, the Dow Jones Industrial Average fell 176.48 ⁠points, or 0.33%, to 53,509.63, the S&P 500 lost 12.48 points, or 0.16%, to 7,735.23, and the Nasdaq Composite lost 9.14 points, or 0.04%, to 26,573.86.

UTILITIES GAIN, CREDIT REPORTING FIRMS DROP Utilities ​were the only major S&P 500 sector trading higher as investors gravitated toward defensive stocks following the jobs report.

Among stocks, Lululemon Athletica fell 16.9% after it ⁠slashed its full-year profit and revenue forecasts. Adobe dropped 7.3% after it said longtime CEO Shantanu Narayen will hand over the reins to insider Anil Chakravarthy.

U.S. credit reporting agencies lost ground after U.S. Director of Federal ⁠Housing ​Bill Pulte said on Thursday he directed Fannie Mae and Freddie Mac, created by the U.S. Congress to support the housing market, to approve all lenders to use credit scoring system VantageScore. Fair Isaac lost 20%, TransUnion was down 9.4%, while Equifax slid 8%.

As investors head into the Labor Day weekend, debate about the seasonal ⁠weakness of September also persists. Historically, September is the weakest month for stocks. But most of the weakness comes in the second half of the month, with returns ⁠averaging worse than 1%, according to Melissa ⁠Brown, global head of investment decision research at SimCorp.

Declining issues outnumbered advancers by a 1.76-to-1 ratio on the NYSE. On the Nasdaq, declining issues outnumbered advancers by a 1.35-to-1 ratio. The S&P 500 posted one new 52-week high and four new lows, while ‌the Nasdaq Composite recorded ‌15 new highs and 38 new lows.