(Updates with index/price moves, comments and company/geopolitical news from the first paragraph.)
US equity indexes retreated as markets increasingly priced in an interest rate increase as early as this month after the economy added almost triple the number of jobs expected in August.
The Nasdaq Composite fell 0.3% to 26,506.99, the S&P 500 slid 0.4% to 7,718.60, and the Dow Jones Industrial Average backtracked 0.5% to 53,414.25 on Friday. All sectors except industrials, technology and utilities fell. Consumer discretionary, communication services and healthcare were among top decliners.
Total nonfarm payrolls rose by 162,000 last month, the Bureau of Labor Statistics said Friday, compared with a 55,000 increase projected in a Bloomberg-compiled survey. July's tally was revised to show a gain of 21,000 from a 23,000 fall, while June's increase was adjusted upward by 11,000.
"This is the strongest pace of job expansion in five months, punctuated by also being three times greater than expected and the positive upward revisions to prior months," said Thomas Feltmate, senior economist at TD Economics. "On balance, we like the breadth and depth of this jobs report. Markets have taken note too."
The probability of the Federal Reserve raising its target rate by 25 basis points to 3.75%-4.0% in September jumped to 58% after midday from 49% a day ago, according to the CME FedWatch tool. The remaining likelihood is that policy will remain on hold.
"The [Consumer Price Index] for August (next Friday) is likely to be a significant input into the September policy decision," a Macquarie note said. "If this is strong, it will likely solidify a hike this month. In contrast, soft data could lead the [Federal Open Market Committee] to defer a hike to October or December."
President Donald Trump called on the Fed to lower interest rates, saying the US economy is a stronger credit than it was previously. In a post on Truth Social, Trump said job growth exceeded estimates and argued that a "strong country means a lower interest rate." Trump urged the Fed to adopt the world's "lowest rate," warning he could halt trade with countries with which the US maintains trade deficits.
Most US Treasury yields rose, with the two-year up 4.3 basis points to 4.38%. The 10-year yield advanced 2.2 basis points to 4.78%.
Gold futures dropped 1.3% to $4,480.8, and silver futures declined 1.4% to $66.80.
In company news, Lululemon Athletica (LULU) reported softer-than-planned fiscal Q2 results and lowered its fiscal 2026 guidance again, prompting a cautious stance on the stock, as the delayed start of incoming CEO Heidi O'Neill leaves the company a "rudderless ship" and risks further competitive disintermediation amid deteriorating macro conditions, Oppenheimer said Friday. Shares sank 17%, the worst performer on the S&P 500.
Apple's (AAPL) initial production of its long-awaited foldable iPhone is limited to a few hundred units per day, mainly because of stringent quality-control requirements, Nikkei Asia reported Friday, citing unnamed sources. Shares dropped 2.5%, the Dow's worst performer.
US President Donald Trump said he may order strikes on Iran's Pickaxe Mountain, reported to host nuclear facilities, "very soon," Al Jazeera, a Middle Eastern broadcaster, reported.
US State Department spokesperson Thomas Pigott said Washington "remains committed" to cutting off Iran's access to the global finance system and preventing Tehran from "threatening" regional stability. The statement comes hours after the Treasury Department added Turkiye's Golden Global Bank to a long list of sanctioned entities it says are working with Iran.
The front-month US West Texas Intermediate crude oil contract was little changed at $91.32 per barrel, and global benchmark North Sea Brent rose 0.5% to $96.00 per barrel.