STORY: U.S. stocks sank on Friday, 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.

Wall Street's main indexes closed their second consecutive week in the red.

They finished Friday's session off more than one and a half percent each.

Most of the 11 S&P 500 sectors declined as did six of the "Magnificent 7" megacap technology stocks with only Meta Platforms climbing about eight tenths of one percent.

The Labor Department said the economy added 256,000 jobs in December, far above estimates, while the unemployment rate fell to 4.1% from 4.2%.

A hotter-than-expected job gain could signal faster economic expansion, and therefore a rise in prices.

The Wealth Alliance President and Managing Director Eric Diton says that could mean no interest rate cuts at all in 2025.

"The Fed will probably not cut rates anywhere near where the market thought it would. Just a few months ago, we were expecting a good four cuts in 2025. And, I my opinion, we're probably not seeing cuts anytime soon. We may not see a cut this year if the economy continues along this trajectory."

In fact, Bank of America Global Research is now forecasting a potential rate hike.

However, Chicago Fed President Austan Goolsbee said there is no evidence the economy is revving up again, adding he still expects it will be appropriate to lower interest rates further.

Other stocks on the move included Corona beer distributor Constellation Brands which fell 17% to its lowest level in more than four years after cutting its annual sales and profit forecasts.

And shares of Walgreens Boots Alliance jumped 27.5% after the company reported an upbeat quarterly profit.