1st LD Writethru: U.S. stocks slump on rate hike concerns

U.S. stocks fell sharply Friday, with the three major indices all losing more than 1 percent, as investors worried that a strong jobs report indicated the rate hike could come sooner rather than later.

The Dow Jones Industrial Average tumbled 278.94 points, or 1.54 percent, to 17,856.78. The S&P 500 dropped 29.78 points, or 1.42 percent, to 2,071.26. The Nasdaq Composite Index decreased 55.44 points, or 1.11 percent, to 4,927.37.

Total nonfarm payroll employment increased by 295,000 in February, well above market expectations, and the unemployment rate edged down to 5.5 percent, the U.S. Labor Department said in a report Friday.

In February, average hourly earnings for all employees on private nonfarm payrolls rose by 3 cents to 24.78 U.S. dollars. Over the year, average hourly earnings have risen by 2 percent.

A strong monthly jobs report, however, heightened speculations that the Federal Reserve could raise interest rates sooner than anticipated.

"Strong hiring continues in the first quarter. It's not quite up to the fourth quarter's 324,000/month, but 252,000/month is plenty strong enough to keep the Fed on the tightening track despite that pesky falling inflation rate," said Chris Low, chief economist at FTN Financial, in a note.

Meanwhile, the U.S. trade deficit in goods and services decreased to 41.8 billion dollars in January from 45.6 billion dollars in December, as imports decreased more than exports, said the U.S. Commerce Department.

In corporate news, Apple, the largest U.S. company by market value, will join the Dow Jones Industrial Average on March 18 after the closing bell, replacing AT&T, said S&P Dow Jones Indices in a press release Friday. The tech giant's shares edged up 0.15 percent to 126.60 dollars apiece. Endite