Jan 10 (Reuters) - The economically sensitive Russell

2000 small-cap index closed down more than 10% from its most

recent November high on Friday, commonly known as correction

territory, as investors scaled back expectations for rate cuts

by the Federal Reserve following a strong jobs report.

The benchmark index dropped 2.22% to 2,189.23 points

on the session, a drop of 10.35% from its recent closing high of

2,442.03 hit on Nov. 25.

The small-cap index has yet to end a session above its

record closing high of 2,442.74 points hit in November 2021,

which would confirm the index is in a bull market.

U.S. equities tumbled after data showed job growth

unexpectedly accelerated in December, while the unemployment

rate fell to 4.1% as the labor market ended the year on a solid

footing.

The blowout report led to traders paring back their rate

expectations for 2025, with most seeing the Fed waiting until at

least June to reduce its policy rate, compared to chances of a

cut as early as May and about a 50% chance of a second rate cut

before the end of the year prior to the data.

Small-caps are seen as vulnerable in a higher interest rate

environment as they tend to rely more heavily on borrowing to

support growth than their large cap counterparts.