The unexpected strength of the US economy, underscored by a surprising payrolls report, has shifted market expectations regarding Federal Reserve rate cuts. This robust labor market data has led to a rise in Treasury yields, which in turn has exerted pressure on equities, including the S&P 500 Index. The index has seen a decline as investors reassess the likelihood of multiple rate cuts this year, now considering only one cut plausible, if any. The increase in yields has particularly impacted interest-sensitive sectors, contributing to the broader market's downturn. Despite these challenges, the strong economic backdrop and potential future tax cuts have provided some resilience to US equity markets.
The SPDR Portfolio S&P 500 ETF (SPLG) experienced a decline, dropping 1.56% to $68.25 at 4:20 PM on Friday, January 10.