After Friday's jobs report, some economists raised their forecast for Fed rate increases this year to four from three. The Dow Jones industrial average lost 305 points, or 1.2 percent, to 25,880.
All 11 S&P industry groups fell, with energy (-4.1%) pacing the retreat following disappointing Q4 earnings reports from Exxon Mobil and Chevron; also, U.S. WTI crude oil futures slipped 0.8% to $65.30/bbl.
In small-caps, the Russell 2000 Index closed at 1,547.27 for a loss of -32.59 points or -2.06%.
Analysts cautioned against reading too much into the market declines, which follow a massive rally in 2017 that was fuelled by a strengthening global economy and high expectations for United States corporate tax cuts.
The economy's growth already has helped push up market interest rates, and the yield on the Treasury's 10-year note hit 2.84 percent on Friday, its highest level since 2014.
The Standard & Poor's 500 index and The Nasdaq also tumbled Friday, losing 58 and 136 points respectively as of the closing bell.
The S&P 500, which many index funds track, last month soared 5.6 percent, its biggest monthly gain since March 2016. According to the report, average hourly wages were 2.9 percent higher than a year ago, too.
While the USA stock market suffered a paper loss of $1.25 trillion this week, it has still generated $7.4 trillion in wealth since Election Day 2016, according to Wilshire Associates.
While some pundits questioned whether the incendiary memo was dousing the stock market blaze, experts said the market downswing was all about the numbers.
But they said that numerous fundamental factors that have driven stocks higher - including rising corporate earnings - remain intact, and that Friday's trading had no signs of panic selling. "The concern for the stock market is as interest rates go up so does the cost of debt service, the discount rate that you would use in factoring earnings growth for companies".
The airwaves and chatter have been flooded in recent weeks with speculation of a market pullback like the one that thundered in on Friday.
The S&P 500 fell 3.8%, while the Nasdaq declined 3.5%.
Google-parent Alphabet fell 4.9 per cent after its profit also misses analysts' estimates.
Apple shares were off by 3.5 per cent as investors anxious about the iPhone maker's weak outlook amid reports of scaled back iPhone X production.
The global economy is still strong, corporate profits and sales have been better than expected this reporting season, and buyers for stocks still remain, all reasons to be optimistic about stocks, said Nate Thooft, senior portfolio manager at Manulife Asset Management.