Stocks plunge as US jobs report raised propects for higher interest rates

Markets fell on Friday.

The S&P 500 plunged 2.1 percent, its biggest one-day drop since September 2016. The STOXX Europe 600 tumbled 1.4 percent, its biggest one-day percentage loss since September 2016. The Nikkei 225 fell 0.9 percent.

The US employment report on Friday showed that the economy added 200,000 jobs in January, raising expectations of tighter monetary policy by the Federal Reserve.

“A big wage growth number is the biggest risk to the stock market rally, because it means the Fed may get more aggressive in raising interest rates,” said Kristina Hooper, chief global market strategist at Invesco.

The decline in stocks comes as strategists at Bank of America Merrill Lynch recommended that investors sell risk assets after its Bull & Bear indicator surged to 8.6 over the past week into “extreme bullish” territory.