US stocks fell sharply on Friday, with tech leading the way down after May’s jobs report blew past expectations, while a rotation out of tech stocks and chipmakers continued.
The Dow Jones Industrial Average (^DJI) fell 1.3%. The benchmark S&P 500 (^GSPC) sank 2.6%, while the tech-heavy Nasdaq Composite (^IXIC) plunged by over 4.1%, with shares of Nvidia (NVDA) falling 6%.
The May jobs report far exceeded expectations, with US employers adding 172,000 jobs last month, well above economists’ expectations of around 88,000. The unemployment rate held steady at 4.3%.
But the strong report also fueled bets on a Federal Reserve rate hike at some point this year, as the labor market stabilizes amid high inflation. Traders are now fully pricing in a rate hike from the central bank by the end of the year, even as President Trump continues to call for cuts as Kevin Warsh, his appointee to chair the Fed, takes the helm.
Meanwhile, the rotation out of chipmakers and tech stocks gathered steam. Broadcom (AVGO) earnings sent shockwaves through the AI trade earlier this week, and shares continued plummeting on Friday. Micron (MU), AMD (AMD), and Intel (INTC) all sank.
The S&P 500 snapped a historic weekly winning streak. The benchmark index fell 2.5% for the week, posting its first weekly decline in 10 weeks.
Elsewhere, the fragile ceasefire between the US and Iran, along with reports of stalled negotiations, continues to fuel uncertainty on Wall Street, even as President Trump assures that talks are in their “final” stages.