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December US job growth beats expectations

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Walgreens set for best day since 1980 after Q1 profit beat

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Constellation Brands ( STZ ) slides after trimming FY forecasts

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Indexes off: Dow 1.49%, S&P 500 1.58%, Nasdaq 1.89%

(Updates with mid-session trading)

By Johann M Cherian and Sukriti Gupta

Jan 10 (Reuters) -

Wall Street's main indexes fell on Friday, with the S&P 500

touching an over two-month low after an upbeat jobs report

stoked fresh inflation worries and reinforced bets that the

Federal Reserve will be cautious in cutting interest rates this

year.

Along with the day's declines of about 2.4%, the

domestically focused small-cap Russell 2000 index fell

about 10% from its intraday high hit in late November, to what

is known as correction territory.

At 11:50 a.m. ET, the Dow Jones Industrial Average

fell 634.08 points, or 1.49%, to 42,001.12, the S&P 500

lost 93.25 points, or 1.58%, to 5,825.00 and the Nasdaq

Composite lost 367.64 points, or 1.89%, to 19,111.24.

A Labor Department report 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 market was planning for lower interest rates which

now seem to be off into the future, if at all this year," said

Robert Pavlik, senior portfolio manager, Dakota Wealth.

"Now, with at least a stronger appearing economy keeping

the Fed on hold for longer it just makes it a much more

difficult environment for stocks, at least short term."

Traders now see the central bank lowering borrowing

costs for the first time in June and then staying steady for the

rest of the year, according to the CME Group's FedWatch Tool.

Brokerages also revised their Fed rate cut forecasts,

with BofA Global Research forecasting a

potential rate hike

.

However, Chicago Fed president Austan Goolsbee

said

there is no evidence the economy is overheating again,

adding he still expects it will be appropriate to lower interest

rates further.

Pressuring stocks, the yield on the 30-year Treasury

note touched 5% - its highest since November 2023,

while Wall Street's fear gauge hit a more than two-week

high.

Ten of the 11 S&P 500 sectors declined, led by

technology stocks' 2.7% drop, while rate-sensitive

financials and real-estate also lost over 2%

each.

Adding to the dour mood, a University of Michigan survey

showed consumer sentiment dropped to 73.2 in January from the

previous month.

Wall Street's main indexes are poised to close their second

consecutive week in the red, with the benchmark S&P 500

down 4.5% from its record high hit a month ago.

Fresh inflation worries have taken the spotlight, compelling

the Fed to issue a cautious forecast on monetary easing last

month, as it anticipates policy changes on trade and immigration

under President-elect Donald Trump, who is expected to take

office in 10 days time.

Chip stocks such as Nvidia ( NVDA ) dropped 3.6%, weighed

down by a report that the U.S. could announce new export

regulations as early as Friday.

Constellation Energy ( CEG ) soared 22% after agreeing to

buy privately held natural gas and geothermal company Calpine

Corp for $16.4 billion, while Constellation Brands ( STZ ) slid

14.8% after cutting its annual sales and profit forecasts.

Walgreens Boots Alliance ( WBA ) jumped 23% after reporting

an upbeat quarterly profit.

Declining issues outnumbered advancers by a 4.41-to-1

ratio on the NYSE and by a 3.74-to-1 ratio on the Nasdaq.

The S&P 500 posted five new 52-week highs and 30 new

lows, while the Nasdaq Composite recorded 31 new highs and 167

new lows.