US Equity Indexes Drop With Treasury Yields as Concern Mounts Over Fed's December Rate Cut

05:13 PM EST, 11/20/2025 (MT Newswires) -- US equity indexes fell on Thursday, reversing a rally fueled by Nvidia (NVDA) , as government bond yields slid and volatility surged amid concern that the September nonfarm payrolls could complicate the path for an interest-rate cut in December.

The Nasdaq Composite fell 2.2% to 22,078.05, with the S&P 500 down 1.6% to 6,538.76 and the Dow Jones Industrial Average 0.8% lower at 45,752.26. Technology, consumer discretionary, and materials led the decliners, while the sole gainer was the consumer staples sector.

September nonfarm payrolls rose by 119,000, above the 51,000 jobs increase expected in a survey compiled by Bloomberg, while August payrolls saw a downward revision to a 4,000 decrease, the Bureau of Labor Statistics said on Thursday. The July data were also revised lower to a 72,000 gain.

October's nonfarm payrolls will be released along with the November report on Dec. 16, the BLS reportedly said on Wednesday. The new date is six days after the Federal Reserve concludes its final policy meeting of the year.

"A December [Fed rate] cut remains a close call, and it will ultimately depend on the data released in the next few weeks, such as claims and the timely reports from ADP," Thomas Simons, Jefferies Chief US Economist, said in a note. "If they continue to hold up, then the Fed will probably be on hold, at least for this meeting."

The unemployment rate in the BLS report rose to 4.4% in September from 4.3% in August, versus a forecast of 4.3%. Hourly earnings edged up 0.2%, versus the 0.3% gain expected and a 0.4% increase in August.

"Mixed signals from the [unemployment] rate," Morgan Stanley economists, including Michael Gapen, said in a note. The rise was more participation, not layoffs, and with no change in the labor force participation rate, the unemployment rate would have fallen, he said.

Meanwhile, US initial jobless claims fell to 220,000 in the week ended Nov. 15 from 228,000 in the previous week, compared with expectations for a decrease to 227,000 in a survey of analysts compiled by Bloomberg.

The Philadelphia Federal Reserve's monthly manufacturing index improved to minus 1.7 in November after worsening to minus 12.8 in October, compared with expectations for an increase to 1.0 in a survey compiled by Bloomberg.

"We no longer expect that the Fed lowers the fed funds rate in December," Morgan Stanley's Gapen added.

Most Treasury yields fell, with the 10-year down 4.5 basis points to 4.09% and the two-year lower by 6.3 basis points to 3.54%.

The CBOE Volatility Index soared 12% to 26.42, its highest since late April.

Datadog (DDOG) and Micron Technology (MU) were among the worst performers on the S&P 500 and the Nasdaq on Thursday, down 9.5% and 11%, respectively. On the Dow, Boeing (BA) and Nvidia (NVDA) were among the steepest decliners, lower by 3.4% and 3.2%, respectively.

Nvidia (NVDA) was up more than 3% earlier in the day after reporting blockbuster Q3 results, including market-beating guidance overnight. Around midday, the chipmaker's rally fizzled out, and so did gains in the three mainstream indexes, which were up by at least 1.4% each intraday.

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