U.S. stocks declined and Treasury bond yields mostly rose Friday after the government reported that employers unexpectedly added 162,000 jobs in August, a figure that could give the Federal Reserve room to raise its benchmark short-term interest rate in the fight against inflation when policymakers meet later this month. The report lands at a delicate moment for markets, which have spent much of the year whipsawed between signs of resilient growth and the threat of tighter monetary policy.

In morning trading, the S&P 500 fell 0.5 percent, while the Dow Jones Industrial Average dropped 378 points, or 0.7 percent, as of 11:08 a.m. Eastern time. The Nasdaq composite slipped 0.4 percent.

Gains in technology stocks helped limit losses in other sectors. Nvidia rose 1.9 percent, Micron Technology gained 4.3 percent, and Sandisk climbed 8.7 percent.

Lululemon Athletica plunged 19.1 percent after the retailer reported quarterly revenue that fell short of analysts' estimates and lowered its fiscal full-year outlook again. The move was one of the sharpest single-stock declines of the session and extended a rough stretch for consumer-facing retailers contending with costlier inputs and cautious shoppers.

Markets were mixed in Europe and Asia.

U.S. government bond yields, which had eased over the previous couple of days, mostly moved higher. The yield on the 10-year Treasury, which influences mortgage rates, held steady at 4.77 percent. It has been rising steadily throughout the year and stood as low as 4.20 percent at the beginning of 2026. Higher yields also raise borrowing costs for businesses and households carrying credit card debt, auto loans, and corporate bonds, one channel through which Fed policy transmits to the broader economy.

The yield on the 2-year Treasury, which closely tracks expectations for Federal Reserve moves on interest rates, rose to 4.37 percent from 4.34 percent late Thursday. Like the 10-year, it remains significantly higher for the year, having been as low as 3.50 percent at the start of 2026.

Wall Street expects the central bank to raise interest rates before the end of the year in an effort to cool inflation, which has been running hot due to rising oil prices amid the U.S. war with Iran and remains well above 3 percent. The Fed has a stated goal of bringing inflation down to a 2 percent target.

The Labor Department reported that August hiring far exceeded the 65,000 jobs forecasters had expected, according to a poll by FactSet. The department's revisions also looked strong, adding 55,000 to June and July payrolls. The unemployment rate held steady at 4.1 percent.

A stronger jobs market could complicate matters for the Fed, which must balance supporting job growth against fighting inflation — the two halves of its dual mandate. Raising interest rates can help tame inflation by slowing economic growth.

Expectations for a rate hike in September climbed to 60.2 percent on Friday following the release of the jobs report, up from 49.4 percent Thursday and 57 percent a week earlier, according to CME FedWatch.

The government is scheduled to release August inflation figures on Sept. 11, shortly before the Fed's policymaking committee convenes for a meeting that ends Sept. 16. That makes the CPI reading the last major data point policymakers and investors will weigh before the rate decision. The closely watched consumer price index (CPI), which measures costs for consumers, is expected to show that inflation rose last month at a 3.4 percent rate, matching July. Inflation has held stubbornly above 3 percent for most of the year.

Fed Chair Kevin Warsh said last week at the central bank's annual economic symposium in Jackson Hole, Wyoming, that inflation had not shown sufficient improvement and that the Fed might have "more work to do" — a signal that he is weighing a rate increase at the next meeting.

On Thursday, Federal Reserve Governor Christopher Waller said that if new data next week shows inflation is cooling, he "would be inclined" to keep the Fed's benchmark interest rate unchanged. Should the data show hotter inflation, he would consider a rate hike.

Oil prices initially eased Friday, though they remain elevated following sharp increases earlier in the week as the six-month-long U.S. war with Iran intensified. Iran fired at Kuwait on Thursday in retaliation for U.S. bombardments earlier in the week, and the Strait of Hormuz remains effectively closed. The strait is a critical chokepoint for global oil shipments, and its closure has amplified supply concerns underpinning crude prices.

Brent crude, the international standard, fell 0.6 percent to $94.92 a barrel, while benchmark U.S. crude dropped 0.8 percent to $90.62 a barrel. For the week, they are up 7.7 percent and 8.8 percent, respectively.

U.S. gasoline prices will be higher this weekend than they have ever been at this time of year, according to AAA. Diesel hit an all-time high for any time of year on Friday, soaring to an average of $5.85 a gallon. Because diesel powers many freight and delivery networks, higher diesel prices translate into higher transportation costs for a wide range of everyday goods — a price shock that can feed through to consumers.

Source: The Korea Times