Stocks slump as Big Tech sinks and a strong May jobs report boosts odds for higher interest rates
Wall Street stocks fell sharply as Big Tech companies like Nvidia, Broadcom, and Micron declined, while a stronger-than-expected May jobs report increased expectations that the Federal Reserve may raise interest rates later this year. The S&P 500 dropped 1.7%, the Nasdaq slumped 2.9%, and bond yields surged, with the 10-year Treasury yield hitting 4.54% and the 2-year yield rising to 4.17%, eliminating hopes for an immediate Fed rate cut.
U.S. stock markets experienced a steep decline on Friday, with the S&P 500 dropping 1.7% and the Nasdaq plummeting 2.9%, marking the first losing week in ten months and the biggest one-day drop since March. Tech giants led the downturn, with Nvidia falling 5%, Broadcom dropping 5.7%, and Micron Technology sliding 9.4%, as their high valuations disproportionately weighed on broader indexes. The downturn followed a stronger-than-expected May jobs report, which showed the U.S. added 172,000 jobs, reinforcing expectations that the Federal Reserve may raise interest rates by year-end. The 10-year Treasury yield jumped to 4.54%, and the 2-year yield rose to 4.17%, signaling diminished chances of a rate cut, as analysts like Ronald Temple of Lazard noted the strong employment data had ‘eliminated’ hopes for near-term easing. The Fed, led by incoming Chair Kevin Warsh, is set to meet June 16-17, where policymakers are expected to keep rates steady despite pressure from former President Donald Trump to lower borrowing costs. Markets now assign a 60%+ probability to a rate hike by year-end, according to CME FedWatch. Economic pressures persist, with inflation rising 3.8% in April—the largest increase in two years—partly driven by higher oil prices amid the U.S. conflict with Iran, which has disrupted crude shipments through the Strait of Hormuz. Brent crude fell 2.2% to $92.97, up from $70 pre-war, while gasoline prices surged, further fueling inflation concerns. Corporate earnings reports, now concluding, showed mixed results: Lululemon dropped 7.9% after cutting revenue forecasts, though most companies delivered strong profits, overshadowing fears of tariffs and high energy costs. Analysts warn that AI-driven tech stocks may be overvalued, risking a slowdown in a market that has surged nearly 9% in 2026.
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