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Major U.S. stocks plummeted Friday, with the Dow sinking 665 points, amid signs that strong wage growth may lead to increased interest rates and inflation.

Expand chart

Why it matters: Today was the worst day for stocks since June 2016, after the Brexit vote in Britain. The plunge could signal that the equity markets had overheated after a remarkable 14 months sparked by booming consumer confidence and the promise of a major tax cut after Donald Trump was elected.

The numbers, per CNBC:

  • The Dow dropped 665 points (more than 2%), bringing the 30-stock index below 26,000.
  • The S&P 500 fell 1.8%, with energy stocks performing the worst.
  • The Nasdaq sunk 1.5%.

Driving the drop: Earlier today the Labor Department reported that the U.S. added 200,000 new jobs to the economy, while the unemployment rate stayed at 4.1%. The report also showed that hourly wages grew 2.9% in the last 12 months, the fastest pace in a decade — spurring concerns over inflation.

Between the lines: All this sets the stage for the Federal Reserve to increase interest rates.

"The key for the market today is rising interest rates. The old adage is: 'Bull markets don't die of old age, they are killed by higher interest rates.' That looms large."
— Mike Baele, managing director at U.S. Bank Wealth Management, to CNBC.

Go deeper

Updated 3 hours ago - Politics & Policy

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Illustration: Eniola Odetunde/Axios

  1. Health: Most vulnerable Americans aren't getting enough vaccine information — Fauci says Trump administration's lack of facts on COVID "very likely" cost lives.
  2. Education: Schools face an uphill battle to reopen during the pandemic.
  3. Vaccine: Florida requiring proof of residency to get vaccine — CDC extends interval between vaccine doses for exceptional cases.
  4. World: Hong Kong puts tens of thousands on lockdown as cases surge — Pfizer to supply 40 million vaccine doses to lower-income countries — Brazil begins distributing AstraZeneca vaccine.
  5. Sports: 2021 Tokyo Olympics hang in the balance.
  6. 🎧 Podcast: Carbon Health's CEO on unsticking the vaccine bottleneck.

DOJ: Capitol rioter threatened to "assassinate" Alexandria Ocasio-Cortez

Supporters of former President Trump storm the U.S. Captiol on Jan. 6. Photo: Kent Nishimura / Los Angeles Times via Getty Images

A Texas man who has been charged with storming the U.S. Capitol in the deadly Jan. 6 siege posted death threats against Rep. Alexandria Ocasio-Cortez (D-N.Y.), the Department of Justice said.

The big picture: Garret Miller faces five charges in connection to the riot by supporters of former President Trump, including violent entry and disorderly conduct on Capitol grounds and making threats. According to court documents, Miller posted violent threats online the day of the siege, including tweeting “Assassinate AOC.”

Schumer calls for IG probe into alleged plan by Trump, DOJ lawyer to oust acting AG

Jeffrey Clark speaks next to Deputy US Attorney General Jeffrey Rosen at a news conference in October. Photo: Yuri Gripas/AFP via Getty Images.

Senate Majority Leader Chuck Schumer (D-N.Y.) on Saturday called for the Justice Department inspector general to investigate an alleged plan by former President Trump and a DOJ lawyer to remove the acting attorney general and replace him with someone more willing to investigate unfounded claims of election fraud.

Driving the news: The New York Times first reported Friday that the lawyer, Jeffrey Clark, allegedly devised "ways to cast doubt on the election results and to bolster Mr. Trump’s continuing legal battles and the pressure on Georgia politicians. Because Mr. [Jeffrey] Rosen had refused the president’s entreaties to carry out those plans, Mr. Trump was about to decide whether to fire Mr. Rosen and replace him with Mr. Clark."