Stock market today: DJI falls 1.08%, S&P 500 drops 0.89%, Nasdaq declines 0.92% amid strong jobs report, inflation concerns, and interest rate fears.

The U.S. stock market witnessed a significant downturn today, with all major indices closing in red amidst economic uncertainties and a hotter-than-expected December jobs report. The Dow Jones Industrial Average (^DJI) fell by 1.08%, facing a dip influenced by the market's reaction to the latest employment data. This report revealed a strong addition of 256,000 jobs last month, significantly surpassing expectations of 156,000, which has subsequently led investors to recalibrate their expectations for the Federal Reserve's interest rate policies in the near term.

This revelation drove speculation that the Fed might hold off on cutting rates, putting pressure on stocks. The jobs report's strength also spurred concerns about sustained inflation, which continues to weigh heavily on short-term economic forecasts. As a result, today marked a broad sell-off across sectors, with the S&P 500 (^GSPC) dropping by 0.89%. Similarly, the Nasdaq Composite (^IXIC) experienced a decrease of 0.92%, indicating a widespread apprehension among tech-heavy market participants.

Bond yields surged in response to the robust labor market data, compounding fears that interest rates might remain higher for longer. The yield on U.S. Treasuries escalated, exerting additional pressure on equities as the cost of borrowing becomes more expensive, which typically dampens market enthusiasm.

The heightened market volatility was also echoed across other key sectors, prompting cautionary responses from investors. Notably, investor anxiety was reflected in the rise of Wall Street's Cboe Volatility Index, reaching the highest in three weeks, a sign of increased demand for options protection against potential market downturns.

Further impacting today’s market sentiment was commentary from Fed governor Michelle Bowman, who underscored a cautious approach, indicating that the rate cut in December was a strategic decision in a broader policy recalibration. This stance emphasized the uncertain path ahead for monetary policy, particularly as stakeholders continue to grapple with a mixed economic landscape.

In addition, uncertainty was fueled by concerns regarding the economic agenda of President-elect Donald Trump. Market strategists cautioned that while some of Trump's economic policies, such as corporate tax cuts, were previously welcomed by markets, his latest proposals on trade and immigration might be met with apprehension, potentially unsettling the already jittery bond market.

Ultimately, this confluence of macroeconomic factors and policy speculations drove a challenging trading session as investors adjusted to the implications of a resilient labor market and fiscal policies that could postpone any hope for sooner rate cuts. As markets brace for the coming months, close attention will be paid to upcoming economic indicators and Federal Reserve meetings to discern the trajectory of both monetary policy and market reaction.