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 suffered a loss of 1% (0.01%)

In December the U.S. created 199,000 new jobs, which was significantly below expectations of an increase of 400,000. As the participation rate was unchanged, the unemployment rate dropped to 3.9%. This indicates a tight labor market.

As a sign of inflation pressures likely to continue and prompt the Fed towards sooner than expected tightening of monetary policy, wage growth increased 0.6% per month. That’s higher than the forecast by economists for a 0.4% rise.

“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 yields to rise higher to sustain 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 happened for a very long time. [but] that’s more the environment we’re going to be in,” Keller added.

Even though oil prices were at a low point, energy stocks performed well. Investors continued to support the sector in anticipation of next week’s quarterly earnings season.

“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.

Tech declined as mixed performances in large tech led to losses. The weakness of semiconductor stocks further exacerbated the problem.  

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 (NYSE) gained 7.7% due to reports that the video gaming company will launch a new business in order to establish a market for nonfungible tokens or NFTs and join cryptocurrency partnerships.