By Yasin Ebrahim

Investing.com – The S&P 500 closed down Friday, marking its worst weekly start to a year since 2016 amid pressure from tech stocks as Treasury yields continued to rally on rate hike expectations despite a mixed monthly job report.

The fell 0.4% taking weekly losses to 1.9%. Nasdaq fell 0.01% or 4.8 points and lost 1%.

U.S. economic growth in December was 199,000, well below the expectations of another 400,000. As the participation rate was unchanged, the unemployment rate dropped to 3.9%. This indicates a tight labor market.

Wage growth rose 0.6% in the last month. This is an indication that inflation pressures will persist, prompting the Fed to tighten its monetary policy sooner than anticipated. It was higher than economists expected for 0.4%.

“Today’s data affirms the Federal Reserve’s conclusion that the labor market has recovered despite the shortfall in jobs since February 2020,” said Diane Swonk, chief economist at Grant Thornton.

Tendencies for Fed tightening more quickly pushed yields higher. In fact, the yield on the 10-year note briefly rose to 1.8%. This supported an increase in bids in cyclical market sectors like financials.

Expect the yield increase to be supportive of financials, including bank stocks.

“I would be looking at 2% or even 2.25% on the 10-year yield as an upside target,” Chief Market Strategist David Keller at StockCharts told Investing.com in an interview on Friday.

“[V]Few of us as investors have ever been in an environment where tech stocks have outperformed banks. This hasn’t been the case for a very long time. [but] that’s more the environment we’re going to be in,” Keller added.

The sector continued its shine despite the fact that oil prices ended the week at an uncertain high. However, investors continue to invest in the sector to ensure it is ready for the quarter-end earnings season which begins next week.

“We could come out of this first earnings season, seeing sectors like financials and energy looking fairly attractive and a lot of clouds on the horizon for growth sectors,”  according to Keller.

Technology fell because of mixed results in Big Tech, which saw losses and weak semiconductor stocks that exacerbated this weakness.  

Texas Instruments (NASDAQ :), Lam Research (NASDAQ 🙂 ON Semiconductor (NASDAQ) fell more than 33%

Discovery (NASDAQ:) was one of the bright spots on the day, rising nearly 17% after Bank of America upgraded the stock to buy from neutral, citing the company’s pending merger with Warner Media.

GameStop’s (NYSE:) gain 7% in other news. The videogame company launched a business that will create a platform for NFTs and establish partnerships with cryptocurrency companies.