U.S. stocks are falling Friday after a discouraging report suggested U.S. consumers are bracing for much higher inflation, while a separate update gave a mixed picture of the U.S. job market.

The S&P 500 was 0.6% lower and close to wiping out what had been a modest gain for the week, as of 11:30 a.m. Eastern time, while the Dow Jones Industrial Average was down 260 points, or 0.6%. A sharp drop for Amazon following its latest profit report helped drag the Nasdaq composite to a market-leading loss of 1%.

Treasury yields also climbed in the bond market after Friday morning’s report suggested sentiment is unexpectedly souring among U.S. consumers. The preliminary report from the University of Michigan said U.S. consumers are expecting inflation in the year ahead to hit 4.3%, the highest such reading since 2023.

That’s a full percentage point above what they were expecting a month earlier, and it’s the second straight increase of an unusual amount. Some economists pointed to the possibility of U.S. tariffs on a wide range of imported products, which President Donald Trump has proposed and could ultimately push up prices for U.S. consumers.

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Mixed Job Market Report

The consumer-sentiment data followed a mixed report on the U.S. job market. It showed hiring last month was less than half of December’s rate, but it also included encouraging nuggets for workers: The unemployment rate eased, and workers saw bigger gains in average wages than economists expected.

All the data taken together could keep the Federal Reserve on hold when it comes to interest rates. The Fed began cutting its main interest rate in September in order to relax the pressure on the economy and job market, but it warned at the end of the year that it may cut fewer times in 2025 than it earlier expected given worries about inflation staying stubbornly high.

Market Reactions and Forecasts

Interest rates are one of the things Wall Street cares most about because lower rates can encourage investors to pay higher prices for stocks and other investments. The downside is they can also give inflation more fuel.

For Scott Wren, senior global market strategist at Wells Fargo Investment Institute, the jobs report did nothing to change his forecast for the Fed to cut the federal funds rate just once in 2025. That’s a touch more conservative than many traders on Wall Street, who collectively see a nearly 49% chance that the Fed will cut at least twice, according to data from CME Group. Of course, some traders are also betting on the possibility for zero cuts.

Company Earnings and Stock Movements

Amazon, one of Wall Street’s most influential companies, topped analysts’ expectations for earnings at the end of 2024, but its stock nevertheless fell 4%. Investors focused instead on its forecast for upcoming revenue, which fell short of analysts’ expectations.

Homebuilders also tumbled to sharp losses as fewer cuts to interest rates by the Fed could help keep mortgage rates high. D.R. Horton fell 4.5%, and Lennar sank 3.9%.

On the winning side of Wall Street was Expedia Group, which leaped 18.4% after reporting better profit for the last three months of 2024 than analysts had forecast.

Take-Two Interactive Software climbed 14.4% after the video-game company likewise topped profit expectations for the latest quarter. CEO Strauss Zelnick said strength for its NBA 2K game was a major reason. The company also said it continues to expect its latest Grand Theft Auto game to release in the fall, easing concerns about a potential delay.