Stocks Slide as Investors See Rates Rising After Strong Jobs Data

“We’ve gained more and more confidence in the last prints that the Fed doesn’t have to be worried about the labor market,” said Lindsay Rosner, head of multisector fixed income investing at Goldman Sachs Asset Management, adding that she expected the Fed to focus on inflation and hold interest rates steady.

Higher interest rates raise borrowing costs and lower stock valuations over time, weighing on the market.

Some investors have even begun to bet that the Fed could raise interest rates by the end of the year, and now expect a quarter of a percentage point increase by December, according to prices in interest rate futures markets.

The two-year Treasury yield, which is sensitive to changes in interest rates, rose 0.1 percentage points on Friday, its biggest one-day gain in more than a year.

The expectation of higher interest rates is a sharp reversal from investor sentiment before the war began. It also cut against investors’ earlier expectations that Kevin M. Warsh, the new Fed chair handpicked by President Trump, would lower rates.

Article source: https://www.nytimes.com/2026/06/05/business/stock-market-jobs-report.html