Stocks slid on Thursday after better-than-expected jobs data increased investors’ anxiety around the state of the economy and path of interest rates.

The Dow Jones Industrial Average dropped 366.38 points, or 1.07%, to close at 33,922.26. The S&P 500 lost 0.79% to end at 4,411.59. The Nasdaq Composite dropped 0.82% to 13,679.04. Thursday’s session marked the worst daily performance for the Dow and S&P 500 since May.

The three major indexes are on pace to finish the week lower with just Friday’s session left in the holiday-shortened trading week. The Dow is poised for a slide on 1.4% on the week. The S&P 500 and Nasdaq, meanwhile, are on pace for weekly losses of 0.9% and 0.8%, respectively.

Private sector jobs increased by 497,000 in June, according to data from payroll processing firm ADP, in the biggest monthly gain since July 2022. June’s increase was more than double the Dow Jones consensus estimate of 220,000 and far better than the downwardly revised 267,000-job addition seen in May. The 2-year U.S. Treasury yield hit a 16-year high in Thursday’s session.

The ADP data, which is often unreliable and considered more volatile than other employment data, comes ahead of Friday’s official June payrolls report. Economists are expecting 240,000 non-farm payrolls were added last month, a slowing from the 339,000 jobs added in May, according to Dow Jones.

However, traders may now be expecting a hotter number that leads to the Fed resuming its hiking campaign this month after a pause at the June meeting. Traders are pricing in an approximately 92% chance of a hike at the central bank’s meeting later this month, according to CME Group’s FedWatch tool.

“The market clearly would have preferred an in-line number,” said John Lynch, chief investment officer at Comerica Wealth Management. “But because it was more than double expectations, that really ratchets up the fear factor that the Fed would have to be more aggressive.”

On the other hand, job openings fell more than expected in May, according to a Labor Department report. That data can provide hope that the tight job market may be seeing at least some loosening.

JetBlue Airways tumbled more than 7% after the company announced it would end its partnership in the northeast U.S. with American Airlines to focus on Spirit Airlines. American shares moved 2% lower, while Spirit rose more than 1%.

— CNBC’s Jeff Cox contributed reporting