The biggest drags on the market were shares of Apple andTesla, which led to a 2.5 per cent decline in the tech-laden index.

The Labour Department’s closely watched report showed nonfarm payrolls rose by 390,000 jobs last month and wages grew, all signs of a tight labour market.

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Nonfarm payrolls were predicted to rise by 325,000.

The jobs report was reassuring for the current state of the economy, but investors focused on its influence on central bank policy.

Nela Richardson, chief economist at ADP, said the market is trying to funnel its response through what the Fed may or may not do.

The solid report was a double-edged sword, according to Shawn Snyder, head of investment strategy at Citi Personal Wealth Management.

It’s good news that the economy is in good shape, but it’s also good news that the Federal Reserve can continue to tighten monetary policy. It’s a negative for investors because they’re hoping for the Fed to pause later in the year.

Money markets are pricing in 50 basis-point rate hikes by the Fed.

While the May report’s slower-than- expected increase in hourly earnings looked like good news for inflation, it was offset by rising oil prices.

The S&P 500 lost 67.28 points, or 1.63 per cent, to 4,108.54, while the Nasdaq dropped 304.16 points, or 2.47 per cent.

Consumer discretionary was the weakest sector in the S&P’s 11 major sectors with a 2.9 per cent drop. The energy index was the only gainer of the pack as oil prices went up.

The S&P 500 fell 1.2 per cent for the week, while the other two were down, and the Dow lost 0.94 per cent.

Wall Street has been volatile in recent weeks as investors debated whether markets had hit a bottom against the backdrop of some Fed officials suggesting inflation may have peaked.

The economy looks okay. “And the labour market as a signal of the real economy on Main Street looks incredibly solid”, said Richardson, adding that she sees inflation as a threat to that outlook even if it may have peaked.

She said that the peak is not relevant because of inflation and rates. That’s why the wages in the report were so high. While wage growth may not drive up inflation past the peak, it could play a strong role in keeping inflation around these higher levels much longer than anyone expects.

A report that EU countries and mps would agree next week on a common charging port for mobile devices and headphones – a proposal Apple has criticized – was one of the reasons why Apple finished down.

The electric car maker’s shares sank 9.2 per cent after CEO Musk said in an email to executives that he needs to cut about 10 per cent of the company’s workforce.

The annual reconstitution of the FTSE Russell was due to be revealed after the markets closed.

Decliners were favored by a 1.79-to-1 ratio on the Nasdaq compared to the 2.68-to-1 ratio on the New York Stock Exchange.

The S&P 500 had 1 new high and 29 new lows, while the Nasdaq recorded 32 new highs and 88 new lows.

The last 20 sessions have seen an average of 12.89 billion shares traded.