US stocks ended Thursday's session with losses as investors grappled with continued evidence of labor market strength, fueling speculation that the Federal Reserve has room to keep raising interest rates.

After hiring numbers surpassed estimates in a private payrolls report and new claims for unemployment benefits unexpectedly fell last week, the S&P 500 and Nasdaq 100 remained firmly in the red. The yield on the policy-sensitive 2-Year Treasury Note increased the most in a month. The value of the Dollar increased.

Today, dovish remarks from St. Louis Fed President James Bullard, who said rates are approaching a sufficiently restrictive zone, did little to improve sentiment. Instead, investors continued to focus on job data, as the Fed's focus remains on labor market softening. All eyes will be on the government's employment figures, which are due on Friday.

The central bank has stated that tight labor conditions allow it to continue fighting rising prices. At the same time, officials are concerned that financial conditions may become too loose to effectively crimp economic growth, despite the Fed's most aggressive tightening campaign in decades.

Today, Atlanta Fed President Raphael Bostic added to the gloomy mood by saying the central bank still has "much work to do" to control inflation. This week, he joined a chorus of hawkish Fed officials. Neel kashkari, president of the Minneapolis Fed, said on Wednesday that he expects rates to rise as high as 5.4%, while Esther George, president of the Kansas City Fed, said she favors a rise above 5%.

Swaps linked to individual Fed decisions have risen, implying an overnight effective rate of more than 5% in the middle of 2023. The Fed's current target range is 4.25% to 4.5%, with around 37 basis point hikes priced in for the next meeting in February.