U.S. stocks are recoiling on worries that good news on the job market may be too good and prove to be bad for Wall Street by keeping inflation and interest rates high. The S&P 500 was down 0.9% early Friday.

U.S. stocks tumbled, with the S&P 500 erasing its 2025 gains, after an upbeat jobs report stoked fresh inflation fears and reinforced bets that the Federal Reserve will be cautious in cutting interest rates this year.

It wasn’t supposed to be this way. With the economy booming, a friendly Federal Reserve at its back and Donald Trump headed to the White House, Wall Street saw nothing but upside as the calendar turned.

Stock indexes closed mostly lower on Wall Street on the final day of another record-setting year. The S&P 500 slipped 0.4% Tuesday, but still managed to rack up a gain of 23.3% for the year, its second straight year with gains of more than 20%.

The latest U.S. jobs report reveals a strong labor market with unemployment down to 4.1%. But what does this mean for the stock market? 📉 MarketBeat analyst Thomas Hughes breaks down how this data impacts interest rates,