US markets declined yesterday, with the S&P 500 erasing its 2025 gains after an upbeat jobs report stoked fresh inflation fears, reinforcing bets that the Federal Reserve will be cautious in cutting interest rates this year. The Dow Jones Industrial Average fell 697 points, or 1.6%, to 41,938. The S&P 500 lost 91 points, or 1.5%, to 5,827. And the Nasdaq Composite lost 317 points, or 1.6%, to 19,161. Wall Street’s main indexes closed their second consecutive week in the red.

A Labour Department report showed job growth unexpectedly accelerated in December while the unemployment rate fell to 4.1% as the labour market ended the year on a strong note. A hotter-than-expected job gain could translate into faster economic expansion, leading to a rise in prices. To contain a still-elevated inflation rate, the Fed could be forced to take a more conservative stance on rate cuts this year.

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.