NEW YORK (AP) — U.S. stocks are falling sharply on worries that Friday’s good news on the job market may be too good and prove to be bad for Wall Street by keeping inflation and interest rates high.

The S&P 500 was down 1.5% in midday trading and on track for its fourth losing week in the last five. The Dow Jones Industrial Average was down 628 points, or 1.5%, as of 11:45 a.m. Eastern time, and the Nasdaq composite was 1.8% lower.

Stocks took their cue from the bond market, where yields leaped to crank up the pressure after a report said U.S. employers added many more jobs to their payrolls last month than economists expected.

Such strength in hiring is of course good news for workers looking for jobs. But it could also keep upward pressure on inflation by keeping the overall economy humming. That in turn could dissuade the Federal Reserve from delivering the cuts to interest rates that Wall Street loves. Lower rates can not only goose the economy but also boost prices for investments.

The Fed has already indicated it’s likely to ease rates fewer times this year than earlier expected because of worries about higher inflation. That’s in part because some officials are taking seriously the possibility of tariffs and other policies coming from President-elect Donald Trump that could worsen inflation.

To be sure, Friday’s jobs report may not be quite as strong as it seems on the surface. The overall number of hires during the month blew past expectations, but “manufacturing is still getting crushed,” said Brian Jacobsen, chief economist at Annex Wealth Management.

“The macroeconomy may be fine,” he said, “but each individual’s microeconomy could look very different.”

The raises that workers are getting can also be a more important data point for the Fed, and gains in average hourly earnings were below 4% last month. That’s what “the Fed wants to see,” according to Wells Fargo Investment Institute Senior Global Market Strategist Scott Wren.

The nuanced takes helped Treasury yields give back some of their initial bursts following the release of the jobs report. But preliminary results from a separate report later in the morning underscored the issue after suggesting U.S. consumers are getting more pessimistic about where inflation is heading.

Consumers are expecting inflation in the year ahead to be 3.3%, up from an expectation of 2.8% last month, for the highest reading in the University of Michigan’s survey since May. Expectations are worsening across the board, particularly for households that make less in income and among political independents, according Joanne Hsu, director of the Surveys of Consumers.

The problem for Wall Street is that traders were banking on a stream of rate cuts coming from the Fed when they sent U.S. stock indexes to dozens of records last year. Fewer cuts than expected this year would likely mean stock prices either have to fall or profits at companies have to rise more strongly to make up for it.

Stocks seen as the most expensive can feel the most pressure from higher yields. That puts the focus on Big Tech stocks whose prices have soared in the frenzy around artificial-intelligence technology. Apple fell 3.3%, and Nvidia slumped 2.9% for the two heaviest weights on the S&P 500.

Smaller companies can also feel a big hit from high interest rates because of the need for many to borrow to grow. The Russell 2000 index of smaller stocks slumped 2.3% for a worse loss than other indexes.

Insurance companies were also under pressure as wildfires continue to burn in the Los Angeles area. Many of the homes that have been destroyed were in expensive areas where the typical price is more than $3 million. Such high-priced damage could eat into insurers’ profit. Allstate fell 6%, Chubb lost 5.2% and Travelers dropped 4.2%.

Delta Air Lines was able to fly 10% higher Friday because it delivered a stronger profit report for the last three months of 2024 than analysts expected. The airline said it’s seeing strong demand for travel, which accelerated through the end of last year, and it expects that to continue into 2025.

Big banks will begin reporting their own results for the end of 2024 next week, as earnings season gets underway in earnest.

In the bond market, the yield on the 10-year Treasury initially shot to 4.78% after the release of the jobs report, up from 4.68% late Thursday, before easing back to 4.74%. In September, it was below 3.65%, marking a major move for the bond market.

The yield on the two-year Treasury, which moves more closely with expectations for near-term Fed action, climbed to 4.36% from 4.27% late Thursday.

Friday’s jobs report means traders see it as a near certainty that the Fed will not cut interest rates at its next meeting toward the end of this month. That would be the first time it’s stood pat following three straight cuts to interest rates.

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AP Business Writers Matt Ott and Elaine Kurtenbach contributed.