Stocks sink after hotter-than-expected jobs report

US stocks plummeted Friday as investors worried that the stronger than anticipated jobs numbers will lead the Federal Reserve to continue raising interest rates aggressively in November and December in order to squash persistent inflation.

Despite Friday's big losses, stocks still finished the week with gains, thanks to huge market rallies Monday and Tuesday. But the Dow is now back in bear market territory, more than 20% below its all-time high.

The Dow sank about 630 points, or 2.1%.

The S&P 500 fell 2.8%.

The Nasdaq Composite plunged 3.8%.

President Biden's announcement Thursday of a federal pardon for simple marijuana possession lit up (sorry not sorry) shares of several cannabis stocks and ETFs — but the contact high was short-lived.

Canopy Growth (CGC), Cronos (CRON) and the AdvisorShares Pure US Cannabis ETF (MSOS) all enjoyed stock bumps at first.

But reality seemed to set in on Friday, as investors realized that a pardon isn't the same thing as decriminalization. The major cannabis stocks and ETFs all plunged Friday. While more states have legalized recreational and/or medical marijuana, federal laws still prohibit the use, sale and possession of pot.

Until that changes, cannabis stocks may have limited upside. It didn't help that one pot stock, Tilray (TLRY), reported a loss Friday and sales that missed forecasts. Tilray plunged 16%, following a 30% Biden-supplied boost Thursday.

TGIF? Not this F. Stocks continued their swoon late Friday afternoon, with the Dow plunging more than 650 points, or 2.2%. All 30 Dow stocks were in the red.

The S&P 500 was down 2.8%. Tech stocks really took it on the chin, with the Nasdaq Composite plunging nearly 4%. The three indexes are all still up about 1% to 2% this week, however, thanks to big rallies Monday and Tuesday.

Remember those ginormous market rallies from Monday and Tuesday? Ancient history.

Stocks are still up about 2% for the week thanks to those big rallies, but the major indexes took a big tumble Friday after the jobs report reignited worries about more big interest rate hikes from the Federal Reserve. The CNN Business Fear & Greed Index is once again showing signs of Extreme Fear as well.

Concerns about Corporate America's profits didn't help matters.

Chip giant AMD (AMD) plunged more than 10% after warning that sales would take a hit due to slowing demand for personal computers. And denim wasn't in fashion on Wall Street Friday. Levi Strauss (LEVI) tumbled 9% after the company said a strong dollar was eating into sales.

The Dow was down nearly 450 points, or 1.5% in midday trading.

The S&P 500 fell 2%.

The Nasdaq Composite dipped nearly 3%.

Americans are still getting a decent sized bump in their weekly paychecks. Wages rose 5% in September over the past year, according to Friday's jobs report. The problem is that the pace of inflation is still higher than that. In other words, shopping for stuff like groceries and paying monthly rent takes a huge bite out of that higher compensation.

The Federal Reserve wants to see wage growth slow. If that happens, the hope is that companies will be less likely to keep raising consumer prices at a breakneck pace.

For one, these businesses won't have as much pressure on their bottom line from paying higher salaries. And companies also will have to realize that if their customer has less in their pocket, price increases may backfire and lead to lower demand.

Consumer prices surged 8.3% year-over-year in August. The government will report CPI numbers for September next week. Economists are expecting a slight slowdown, to 8.1%. The Fed (and American shoppers) would love to see that number fall even further. The sooner the better.

US stocks opened lower on Friday as investors digested a September jobs report that came in hotter than expected. 

The U.S. economy added 263,000 jobs in September, higher than analyst estimates of 250,000. The unemployment rate came in at 3.5%, down from 3.7% in August.

Strong employment data indicates that the Federal Reserve will continue with its aggressive interest rate hikes to cool the economy and fight persistently high inflation, causing economic pain. 

The Dow fell by 320 points, or 1.1%, on Friday morning.

The S&P 500 was down 1.5%.

The Nasdaq Composite was 2% lower.

The September jobs numbers were probably strong enough to keep the Federal Reserve on track to (chant like a high school cheerleader) be aggressive, be be aggressive with regards to rate hikes.

According to fed funds futures on the CME, investors are now pricing in a more than an 80% chance of a fourth straight three-quarters of a percentage point hike at the Fed's November 2 meeting. That's up from about a 57% probability of another 75 basis point hike a week ago and just a little more than 1% chance a month ago.

What's more, traders are now betting that there's about a 15% probability of yet another three-quarter point rate increase at the Fed's December 14 meeting. The market was pricing in zero chance of that happening only a week ago.

It's no wonder then that stocks are sliding Friday following the jobs report.

Investors were less than pleased after September's job totals came in a bit stronger than expected. With 263,000 jobs added to the US economy last month, the Fed's rate hikes may not be having the slowdown effect policymakers had hoped for.

The Fed was hoping that a long series of historic rate hikes would slow down the economy and bring inflation lower. But the job market remains stubbornly robust, which means the Fed has more room to keep hiking rates.

Rate hikes eat into corporate profits, which has sent stocks sinking sharply in 2022.

Dow futures fell 140 points or 0.5%.

S&P 500 futures were down 0.8%.

Nasdaq futures were 1.3% lower.

The fever hasn’t broken yet for America’s employment market.

The economy added 263,000 jobs in September, the Bureau of Labor Statistics reported Friday. That’s slightly higher than economists’ estimates of 250,000, according to Refinitiv.

While still a robust headline number, it is the second consecutive month of falling totals, pointing to a labor market slowdown.

The unemployment rate fell back to 3.5% from 3.7%.