US stocks drop after new jobs data boosts outlook for a more aggressive Fed

• US stocks fell on Thursday after a hot ADP jobs report reinforced the Fed's hawkish stance.
• The report showed a 235,000 increase in jobs in December, compared to estimates of just 153,000.
• The Fed is expected to hike interest rates by as much as 75 basis points in 2023.

US stocks fell on Thursday after a hot ADP jobs report reinforced the Federal Reserve's hawkish view that it needs to continue with interest rate hikes in 2023.

The report showed 235,000 jobs were added in December, well ahead of estimates for an increase of just 153,000. The Labor Department's jobs report will be released Friday, and consensus estimates currently expect a gain of 210,000.

Meanwhile, the Fed is expected to hike interest rates by 25 basis points at its upcoming February meeting, and hike rates by a total of 75 basis points in 2023. That would put the effective federal funds rate above 5%.

Retiring Kansas City Fed President Esther George told CNBC on Thursday that she believes the Fed should hike interest rates above 5% and hold them at that level well into 2024. That runs against market expectations, which expects rate cuts by 2024.

Here's where US indexes stood shortly after the 9:30 a.m. ET open on Thursday:

• S&P 500: 3,831.84, down 0.55%
• Dow Jones Industrial Average: 33,087.42, down 0.55% (182.35 points)
• Nasdaq Composite: 10,382.08, down 0.73%

Here's what else is happening this morning:

• A top IMF official said the US Fed should continue with its interest rate hikes as inflation has yet to turn the corner.
• Crypto contagion spread on Thursday after Celsius customers lost control of the $4.2 billion they deposited in accounts at the bankrupt crypto lender.
• The downfall of FTX sparked a run on Silvergate Capital, which saw more than $8 billion in withdrawals. Shares of Silvergate plunged 40% on Thursday.
• The most recent minutes from the Federal Reserve showed that the central bank does not see the downfall of FTX "posing broader market risks to the financial system."

In commodities, bonds and crypto:

• West Texas Intermediate crude oil rose 0.25% to $73.02 per barrel. Brent crude, oil's international benchmark, jumped 0.42% to $78.17.
• Gold fell 0.97% to $1,841.00 per ounce.
• The yield on the 10-year Treasury rose seven basis points to 3.76%.
• Bitcoin fell 0.21% to $16,800, while ether dropped 0.39% to $1,248.