US stocks slid Friday as investors digested a better-than-expected jobs report that soured expectations of future rate cuts from the Federal Reserve. The Dow dropped by nearly 700 points, or 1.6%; while the S&P 500 fell by 1.

Payrolls: 256,000 jobs added in December vs. 153,000 expected, according to economists surveyed by FactSet. Unemployment rate: 4.1%, down from 4.2% in November. Revisions: October

"Markets tried to front-run the Fed on the level of interest rates and are now paying the price," Jamie Cox of Harris Financial Group said.

U.S. stock futures leaned lower Friday on concern over possible export restrictions on Nvidia, ahead of key data on the jobs market. Dow Jones Industrial Average futures fell 41 points, or 0.1%, to 42837. S&P 500 futures dropped 17 points, or 0.3%, to 5942.

The December jobs report showed a surprise surge in hiring and an unexpected drop in the unemployment rate. Taken together, the data strengthen the case for the Federal Reserve to maintain its current cautious stance toward lowering borrowing costs,

Key Takeaways The odds of the Federal Reserve cutting its benchmark interest rate this year fell after a jobs report Friday showed hiring in December blew past expectations.Strong job growth means less pressure on the Fed to cut interest rates to save the economy and prevent layoffs.

A hot December jobs report, combined with a murky inflation outlook for 2025, has some economists debating if the Federal Reserve may need to hike interest rates again.