Stock Market Today: S&P 500, Nasdaq Slide as Jobs Report Fuels Fed-Hike Bets

💡 The S&P 500 and Nasdaq composite indices declined sharply on the heels of a stronger-than-expected US jobs report.

The S&P 500 and Nasdaq composite indices declined sharply on Wednesday, as investors adjusted their expectations for a potential Federal Reserve interest rate hike. The Dow Jones Industrial Average also fell, with tech stocks leading the decline.

Jobs Report Fuels Fed-Hike Bets

The Labor Department reported that US nonfarm payrolls increased by 339,000 in April, exceeding the consensus estimate of 190,000. Unemployment rates held steady at 3.4%, while average hourly earnings rose 0.4% from the previous month. The strong jobs data reinforced the notion that the Fed will maintain its hawkish stance, with federal funds futures pricing in a 75% chance of a 25-basis-point rate hike at the June meeting.

Market Reaction

$SPY, the largest ETF tracking the S&P 500, fell 1.4% to $403.75, while $QQQ, the Nasdaq 100 ETF, declined 1.2% to $342.51. Technology stocks, which have been a key driver of the market's recent gains, were among the hardest hit. Netflix ($NFLX) and Tesla ($TSLA) both fell more than 3% on the day.

Fed Signals Rates Higher for Longer

The Federal Reserve signaled that interest rates will remain elevated for longer, citing the need for a sustained decline in inflation before easing policy. Fed Chair Jerome Powell told reporters that the central bank needs "greater confidence" that inflation is sustainably declining before it will consider easing policy.

What It Means for Investors