Strong Jobs Data Push September Fed Rate-Hike Odds to 58.4%, Sending Three Major Indexes Lower: New York Stocks Briefing

Major U.S. stock indexes all closed lower in New York as strong labor data boosted the likelihood of another Federal Reserve interest-rate increase.

On September 4, the Dow Jones Industrial Average fell 271.86 points, or 0.51%, to 53,414.25. The S&P 500 dropped 29.11 points, or 0.38%, to 7,718.60. The Nasdaq Composite lost 77.07 points, or 0.29%, to 26,506.99.

The strong employment data heightened concern over higher rates. The U.S. Labor Department said nonfarm payrolls increased by 162,000 in August from the previous month, the biggest gain in five months. That was nearly triple economists' forecasts.

According to CME FedWatch, the federal funds rate futures market priced in a 58.4% probability of a September rate hike, up 9.0 percentage points from a day earlier.

U.S. Treasury yields also moved higher. The yield on the policy-sensitive two-year Treasury stood at 4.379% as of 3 p.m. Eastern Time, up 4.7 basis points from the previous session. One basis point equals 0.01 percentage point.

The 10-year Treasury yield, the global bond market benchmark, was 4.783%, up 2.2 basis points from the previous session.

The dollar also strengthened. The dollar index, which measures the greenback against six major currencies, rose 0.21% to 99.17.

Cryptocurrencies also came under pressure. Bitcoin, which had recently traded above $80,000, at one point slid into the $78,000 range. The broader crypto market also weakened.

President Donald Trump stepped up pressure on the Fed. In a Truth Social post, Trump said the U.S. would stop trading with countries running deficits against the United States if the Fed does not cut rates. He also told reporters that U.S. interest rates should be 1% or 0.5%.

International oil prices rose. Clashes between Yemeni government forces and rebels in the Bab el-Mandeb Strait, which connects the Red Sea and the Gulf of Aden, fueled concerns over supply disruptions.

Brent crude for November delivery rose 0.80% to settle at $96.28 a barrel. West Texas Intermediate crude for October delivery gained 0.20% to close at $91.48 a barrel.

The market's next focus is the August consumer price index. With the jobs report lifting the odds of a Fed rate increase again, inflation data are set to be a key variable for the direction of monetary policy.

Han Kyung-woo, Hankyung.com reporter, case@hankyung.com