Wall Street tumbles as strong jobs data sparks rate fears, chip stocks lose over $1 trillion

NEW YORK: U.S. stocks closed sharply lower on Friday, with technology and semiconductor shares leading a broad market sell-off after stronger-than-expected employment data reduced expectations for near-term interest rate cuts by the Federal Reserve.

The Dow Jones Industrial Average fell 695.15 points, or 1.35%, to 50,866.78. The S&P 500 declined 200.57 points, or 2.64%, to 7,383.74, while the Nasdaq Composite dropped 1,121.53 points, or 4.18%, to 25,709.43, marking its biggest one-day percentage loss since April 2025.

The sell-off ended the S&P 500’s nine-week winning streak, its longest run of weekly gains since late 2023. Technology stocks were hit hardest, with the sector falling 5.8%.

The Philadelphia Semiconductor Index recorded its largest daily percentage decline since March 2020, wiping out more than $1 trillion in market value. Nvidia fell 6.2%, while Intel, Micron, AMD and Broadcom declined between 7.9% and 13.3%.

Investor sentiment weakened after the U.S. Labor Department reported that the economy added 172,000 jobs in May, more than double analysts’ expectations. The unemployment rate remained unchanged at 4.3%.

The stronger labour market data reinforced concerns that the Federal Reserve may keep interest rates higher for longer. According to CME’s FedWatch tool, financial markets are now pricing in a 42.7% probability of a rate hike by the Fed’s December meeting.

Concerns over tensions in the Middle East also weighed on markets. Investors remain focused on the conflict involving Iran and Israel and uncertainty surrounding the reopening of the Strait of Hormuz, a key global energy shipping route.

Among individual stocks, Lululemon Athletica fell 8.6% after lowering its annual profit forecast and issuing weaker-than-expected earnings guidance. Cooper Companies rose 8.6% after reporting quarterly results that exceeded market expectations.

Cryptocurrency-related stocks also declined as bitcoin fell 4.1%. Coinbase dropped 7.1%, while Strategy lost 6.9%.

Market breadth remained weak, with declining stocks outnumbering advancing issues by more than three-to-one on both the New York Stock Exchange and Nasdaq. Trading volume on U.S. exchanges reached 22.89 billion shares, above the 20-day average of 20.29 billion shares.