Wall Street on Friday erased all the gains made in the fledgling year, after a hotter-than-expected jobs report led to analysts and traders significantly dialing back their odds of further Federal Reserve rate cuts.

The dollar rallied, while U.S. stocks fell sharply on Friday after data showed the U.S. economy created far more jobs in December than expected, reinforcing the belief among investors that U.S. interest rates may not fall much this year.

Friday’s unexpectedly big increase in December nonfarm payrolls led to a diminished market-based likelihood for any rate cut by the Federal Reserve until September, based on one method of calculating expectations — and one big bank sees the risks tilting toward a rate hike.

The U.S. job market again defied an anticipated slowdown, with firms adding more than a quarter of a million jobs in the last full month of Joe Biden’s presidency and leaving Federal Reserve policymakers to puzzle over the need for more interest rate cuts in a strong economy.

The U.S. dollar rallied on Friday after data showed the world's largest economy created more jobs than expected last month, reinforcing expectations that the Federal Reserve will pause its rate-cutting cycle at its policy meeting later this month.

Wall Street stocks slid and the dollar climbed Friday as a blockbuster US jobs report dimmed hopes of further interest-rate cuts.

Nonfarm payrolls increased 256,000 and the unemployment rate fell to 4.1%, a Bureau of Labor Statistics report showed Friday.

Equities fell Friday as traders prepared for the release of US jobs data that could play a key role in the Federal Reserve's decision-making on interest rates, with several officials