Dow falls 300 points after much stronger-than-expected jobs report

The Dow Jones Industrial Average fell on Friday as August’s hotter-than-expected payrolls reading increased expectations that the Federal Reserve could raise interest rates at its next meeting.

The 30-stock Dow was down 382 points, or 0.7%. The S&P 500 slid 0.5%, while the Nasdaq Composite shed 0.4%.

Nonfarm payrolls grew 162,000 last month, much more than the 53,000 that economists polled by Dow Jones expected. The unemployment rate held steady at 4.1%, as expected. On top of last month’s gain, figures for both June and July saw upward revisions.

Treasury yields rose following the reprot, with the 2-year yield hitting its highest level since January 2025. Expectations that the Fed could hike rates in a couple weeks increased, as fed funds futures traders are now pricing in a 58% chance of a hike, per the CME FedWatch tool. Odds were at 49.4% a day ago.

“A monster jobs report for August reminds us that this labor statistic has become highly volatile while nudging up the probability of a September hike slightly,” said Bradford Smith, portfolio manager at Janus Henderson Investors.

Now, the debate surrounding the Fed “will sit handily on the incoming inflation data,” he added. “After a hawkish appearance from Chairman Warsh at Jackson Hole last week, there is a clear bias at the Fed to take action if the incoming data does not show further progress on disinflation.”