The market already looked like it was set to weaken coming into the day, before the jolting jobs report. Several big tech companies reported weaker profit for the latest quarter.
Wall Street's rally hit a wall after a surprisingly strong jobs report fueled worries about inflation and higher interest rates.
The Dow Jones Industrial Average was down 155 points, or 0.5%, at 33,898, as of 3:14 p.m. Eastern time, while the Nasdaq composite was 1.6% lower. Then came the jobs report, which showed employers created a net 517,000 jobs last month. That was way above the 185,000 that economists expected and a sharp acceleration from December's 226,000 jobs.
"It's going to get harder to argue that rate cuts may be in 2023's future if the labor market is able to continue like this, especially considering that it remains to be seen how quickly inflation will fall, even if we have reached the peak," said Mike Loewengart, head of model portfolio construction at Morgan Stanley Global Investment Office.
Some analysts said they were paying more attention to the data on wages in the jobs report than on overall hiring, which wasn't as surprising. Also helping to muddy the picture was a report showing the U.S. services sector returned to growth in January. It was a much stronger reading than expected, though it also suggested pricing pressures may be easing.
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