Stocks fell on Friday morning as traders evaluated September's jobs report, which showed the unemployment rate continuing to decline and sparked an increase in interest rates.
The Dow Jones Industrial Average fell 301 points, or 1.1%. The S&P 500 lost 1.4%, while the Nasdaq Composite slipped 9%.
Friday's jobs numbers showed the U.S. economy added 263,000 jobs in September, slightly below a Dow Jones estimate of 275,000. However, the unemployment rate came in at 3.5%, down from the 3.7% in the previous month in a sign that the jobs picture continues to strengthen even as the Federal Reserve tries to slow the economy with rate hikes to stem inflation.
"While the data was about as expected, the drop in the unemployment rate is seemingly what the markets are obsessed with because of what it means for the Fed," said Bleakley Financial chief investment officer Peter Boockvar. "When combined with the low level of initial jobless claims, the pace of firing's remains muted and this of course gets the Fed all fired up about continuing with its aggressive rate hikes."
The falling unemployment rate sparked a jump in rates, in turn weighing on futures. The 2-year year Treasury yield jumped 8 basis points to 4.31%. (1 basis point equals 0.01%.)
Advanced Micro Devices' stock fell after the chipmaker warned its third-quarter revenue would be lower than anticipated. Levi Strauss shares slipped following a cut to its guidance.
Major averages closed lower during Thursday trading but are on pace for an up week. The Dow and S&P are each set to end the week about 3% higher, while Nasdaq is on pace to rise 2%.
"The environment is ripe for a crisis and if the Fed keeps its hawkish communication up I think we're quite likely to have something break in the financial markets," Scott Minerd, Guggenheim's global chief investment officer said on CNBC's "Closing Bell: Overtime" on Thursday.
Minerd said the pace of tightening is beginning to create cracks in the financial markets and could force a Fed pivot in the coming weeks.
"All the signs are there," he said. "I can't tell you exactly what will cause it, but the environment is ripe and when the Fed pivots, they're not going to preannounce it, they're not going to ring a bell."
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