In the worst sell-off since President Trump was elected, US stocks tumbled on Friday on fears a still expanding economy was finally pushing interest rates into the red zone.
As investors fled equities, the Dow Jones industrial average tumbled 666 points — the largest point decline for the index since the Great Recession.
One hour after the Labor Dept. on Friday morning reported a better-than-expected 200,000 jobs were created in January — all but ensuring a robust Federal Reserve attack on interest rates — investors opened the Dow down 125 points, and it went south from there.
“We all know that many bull markets have ended by the Federal Reserve as they raise the rates to the point of slowing the economy down perhaps too much,” Quincy Krosby, chief market strategist at Prudential Financial, told The Post.
“It’s come on quickly and it caught the market off guard,” Krosby said.
The Dow sell-off brought it below the 26,000 plateau — to 25,520.96 — the biggest points drop since Dec. 1, 2008.
The 2.5 percent drop, on a percentage basis, was the biggest since the day after the UK voted to exit the European Union — an event that sent markets into a free-fall the world over.
The Friday sell-off put the Dow on pace for its worst week in more than two years.
Even amid the fire and brimstone, some Wall Street stalwarts shrugged off the decline as no big deal.
“Stay the course,” said Greg McBride, chief financial analyst at Bankrate.com. “Markets go up and down, not just up. But they go up a lot more than they go down, so hang in there and consider buying more.”
The Dow had increased more than 7 percent so far this year, to a peak of 26,616 last week — one of the best starts even to a year.
The pullback only brings the index back to the level of Jan. 10, Bankrate.com spokesman Ted Rossman noted.
“That’s right, all we’ve done is unwind three weeks’ worth of gains,” he added.
The strong January jobs report — which included news that wages have grown by 2.9 percent over the past year, the biggest rise in four years — sparked a cascade of panic-selling.
Bond investors sold off government debt, on fears that the Fed may have to raise rates four times this year — one more time than the central bank has forecast, Krosby said.
Earlier this week, the Fed had hinted that it would likely raise rates for the first time this year in March. The central bank tends to shy away from specific guidance to the markets.
The yield on the 10-year bond, which moves in the opposite direction of price, rose as high as 2.85 — which it hadn’t seen since 2014, an ominous sign that investors expect the US economy to inflate.
Practically, that means that it’s going to get more expensive to borrow money for both businesses and individuals who want to buy a house, car, or put a vacation on a credit card.
“Mortgage rates have already moved higher,” Krosby said. “The cost of money in essence goes up.”
The S&P 500, a broader index of stocks, fell 2.12 percent, to 2,762.13. The Nasdaq composite dropped 1.96 percent, to 7,240.95.
