US financial markets suffered a sharp sell-off on Friday after May’s nonfarm payrolls report surprised to the upside, fueling expectations of further Federal Reserve rate hikes and triggering a broad exit from risk assets. The technology-heavy Nasdaq Composite plunged more than 4%—its largest single-day drop since the tariff-driven turmoil of early 2025—while the S&P 500 fell 2.6% and the Dow Jones Industrial Average lost around 685 points (1.3%). The S&P 500’s nine-week winning streak, its longest since late 2023, was broken.
The Labor Department reported that employers added 172,000 jobs in May, nearly double the 88,000 forecast. The unemployment rate held steady at 4.3%. The stronger-than-expected data shifted market expectations dramatically, pushing odds of at least one rate hike by year-end to 68.3%, up from 50.4% the day before. Treasury yields rose sharply, with the 10-year note climbing above 4.5% and the 30-year bond exceeding 5%.
Semiconductor stocks were at the epicenter of the decline. Broadcom shares slid more than 7% on Friday, extending Thursday’s 12% drop after its earnings report left investors disappointed by an unchanged AI semiconductor forecast. The Philadelphia Semiconductor Index tumbled about 9%, with Micron losing ~11%, Intel falling over 9%, AMD sliding ~10%, and Marvell Technology down ~12%. The AI trade, which had powered recent gains, suddenly reversed as investors grew cautious about spending levels.
Cryptocurrency markets were not spared. Bitcoin fell below $60,000 for the first time since late 2024, dragging crypto-related equities lower. Coinbase and Strategy retreated alongside the digital asset. The flight to safety benefited defensive sectors—healthcare and consumer staples—while geopolitical uncertainty stemming from stalled US-Iran ceasefire talks added to the cautious tone.
