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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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University of Michigan survey showed consumer sentiment

dropped

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Indexes off: Dow 1.13%, S&P 500 0.94%, Nasdaq 0.96%

(Updates to mid-afternoon trading)

By Johann M Cherian, Sukriti Gupta and Carolina Mandl

Jan 10 (Reuters) - U.S. stocks tumbled, with the S&P 500

erasing its 2025 gains, after an upbeat jobs report stoked fresh

inflation fears and reinforced bets that the Federal Reserve

will be cautious in cutting interest rates this year.

The domestically focused small-cap Russell 2000 index

fell 2.14%.

"We started the year on the wrong foot," said Sam

Stovall, market strategist at CFRA Research, commenting on the

impact of a hotter-than-expected job data on equities. He added

the environment for stocks could become "quite challenging."

At 02:00 p.m. the Dow Jones Industrial Average fell

482.30 points, or 1.13%, to 42,154.37, the S&P 500 lost

55.59 points, or 0.94%, to 5,862.66 and the Nasdaq Composite

lost 187.52 points, or 0.96%, to 19,291.03.

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 strong note.

"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," said

Robert Pavlik, senior portfolio manager, Dakota Wealth.

Traders 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 financials'

2.34% drop, while rate-sensitive financials and

real-estate also lost roughly 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 around 4% 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 2.61%, weighed

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

regulations as early as Friday.

Constellation Energy ( CEG ) soared 26% after agreeing to

buy privately held natural gas and geothermal company Calpine

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

16.1% after cutting its annual sales and profit forecasts.

Walgreens Boots Alliance ( WBA ) jumped 27.49% after

reporting an upbeat quarterly profit.

Declining issues outnumbered advancers by a 3.74-to-1 ratio

on the NYSE and by a 3.28-to-1 ratio on the Nasdaq.

The S&P 500 posted 6 new 52-week highs and 32 new lows while

the Nasdaq Composite recorded 34 new highs and 193 new lows.