U.S. stocks closed down more than 1 percent on Friday as investors weighed a jobs report that indicated an interest rate hike could come sooner rather than later.
"Good news is bad news again," said Gina Martin Adams at Wells Fargo. Adams said there was a quick jump in the Fed Funds futures this morning. "The percentage chance for a June hike went from 18 percent to 25 percent," she said.
February's nonfarm jobs report showed a gain of 295,000, above expectations of 240,000 in February, down from 257,000 in January. The unemployment rate fell to 5.5 percent, while hourly wages ticked up 0.1 percent, below consensus and off the surprise 0.5 percent gain in January.
"I think a 5.5 percent unemployment rate clinches a June rate hike. which means 'patient' comes out in a week and a half," said Peter Boockvar, chief market analyst at The Lindsey Group.
The report sent turbulence into bond markets, with the U.S. 10-year Treasury note yield rising to 2.25 percent and the 2-year surging to 0.73 percent on increased anticipation of an interest rate hike.
In reaction to rates, the Dow Utilities fell below its 200-day moving average for the first time since January 2014. In the S&P 500, utilities fell more than 3 percent as the greatest laggard.
The Dow Jones industrial average closed below 18,000 for the first time since February 19. The index had its worst day in a over a month, briefly falling more than 300 points, down more than 1.5 percent, with Johnson & Johnson and Procter and Gamble the greatest decliners
All three major indices closed down nearly 2 percent for the week, despite setting records on Monday, when the Nasdaq closed above the psychologically important 5,000 level for the first time since March 2000.
"The market is fearful of the Fed changing its line," said Peter Cardillo, chief market economist at Rockwell Global Capital. "I think today is a bit of an overreaction to the jobs data."