Wall Street’s main indexes closed more than 1% lower on Thursday as fresh evidence of a tight labor market ate away at any hopes investors had that the Federal Reserve could pause its rating hiking cycle anytime soon as it keeps focused on inflation.

The Dow Jones Industrial Average slipped 339.69 points, or 1%, to 32,930.08, the S&P 500 dropped 1.2%, and the Nasdaq was down 1.5%.

Meanwhile, Alphabet and Microsoft fell more than 2% as US Treasury yields surged on prolonged rate-hike expectations.

Tesla dropped 3% after the December sales of its China-made electric vehicles fell to a five-month low, while Amazon, which announced increased layoff plans, reversed premarket gains.

The ADP National Employment report showed a much greater-than-expected rise in private employment in December, while another report showed weekly jobless claims fell last week.

The reports came a day after data showed a moderate fall in job openings, in growing evidence that the labor market remains tight.

“It’s very clear that good news on the labor market means bad news for the stock market. Data is showing that the labor market is very resilient,” said Anthony Saglimbene, chief market strategist at Ameriprise in Tory Michigan.

“As long as the labor market is resilient, the Federal Reserve has to continue to tighten financial conditions to bring inflation down,” said that strategist who expects investors to be keenly focused on wage inflation in Friday’s jobs report.

A strong labor market has been a concern for markets pummeled by rising borrowing costs as it gives the Federal Reserve a reason to raise rates for longer than expected this year.

In the previous session, Wall Street’s main indexes erased some of their gains after minutes from the Fed’s December meeting showed the central bank was laser-focused on fighting inflation even as officials agreed to slow the pace of rate hikes to limit risks to economic growth.

Both Kansas City Fed leader Esther George and Atlanta President Raphael Bostic on Thursday stressed the central bank’s priority to curb stubborn price pressures through policy tightening.

Traders were almost evenly split on chances of a 25-basis point and a 50-bps rate hike in February, but still see rates peaking at slightly above 5% in June. 

The more comprehensive nonfarm payrolls report is due on Friday, which would provide further clues on labor demand and the rate hike trajectory.

Among individual stocks, Walgreens Boots Alliance dropped 6% after the drugstore chain posted a quarterly loss on an opioid litigation charge.

Bed Bath & Beyond lost 30% after the company said it was exploring options, including a bankruptcy filing.