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Financial markets tanked after a stronger-than-expected U.S. jobs report, setting the stage for a Federal Reserve rate increase sooner than investors may have been expecting.The broad S&P 500 fell 2.6% to close near 7,384, while the Dow Jones Industrial Average gave back nearly 700 points, or 1.4%. The tech-heavy Nasdaq Composite sank 4.2%, more than 1,100 points, to close near 25,709.The benchmark U.S. 10-year note, meanwhile, was nearly 7 basis points higher, near 4.551%. Bond yields, or interest rates, move in the opposite direction as prices, and investors sell bonds in higher-inflation environments.U.S. employers added 172,000 jobs in May, and reports from the previous two months were revised up to show a gain of 93,000 more jobs than previously estimated, the Labor Department said Friday.A strong economy and rising prices will probably lead to a Federal Reserve rate hike sooner than later, several analysts said in the wake of the jobs report.On Friday, Liz Ann Sonders, chief investment strategist at the Schwab Center for Financial Research, told USA TODAY that inflation is being nudged higher by a broader array of forces than just the Iran war. Look for prices to stay higher for longer, she said.If the Fed hikes rates, it will make borrowing more expensive. Growth-oriented companies that need to borrow more to finance their expansion are more vulnerable to a higher rate environment. On Friday, two exchange-traded funds that track chipmakers were down sharply. The iShares PHLX Semiconductor ETF (SOXX) and the Invesco Dynamic Semiconductors ETF (PSI) were both down at least 10%.Rising prices also erode the value of bonds, which investors buy for a fixed stream of income.
