New York, June 6, 2026, 14:02 EDT
- The Nasdaq and S&P 500 just had their worst session this year as May hiring outpaced expectations.
- Traders boosted bets on a Fed hike, sending high-growth tech stocks lower.
- Chip stocks dropped after Broadcom’s outlook came in below high hopes.
Stocks in the U.S. dropped hard Friday, with the Nasdaq Composite down 4.18% after an AI rout and Treasury yields climbing on a strong jobs number. The S&P 500 lost 2.64%, which broke its nine-week win streak. Dow Jones fell 695 points, or 1.35%.
AI, chip and data-center stocks took a hit after the move rattled the market’s core. Investors this year have chased names in those sectors, often paying up. On Friday the tide shifted fast, with bond yields up and earnings guidance leaving little to debate.
May’s jobs report set things off. The Bureau of Labor Statistics said 172,000 jobs were added in the U.S. last month, and the jobless rate stayed at 4.3%. Wages kept rising, with average hourly earnings climbing 0.3% for the month and 3.4% year-over-year.
Markets didn’t like it. The economy looked solid, but investors had been positioning for easier Fed policy. Traders now put the chance of a Fed rate hike in December at 43%, up from 26% last month, CME FedWatch data showed, as cited by CNN Newsource. “In the near term the data confirms that Fed easing is off the table this year,” Edward Jones senior economist James McCann said in a note. KTVZ
Treasury yields went up as bond prices dropped. The 10-year yield moved to 4.54%, and the two-year, more sensitive to Fed outlook, climbed to 4.16%, according to Reuters. Higher yields often weigh on stocks, hitting tech names hardest due to their reliance on future profits.
Chip stocks took the biggest hit. U.S. semiconductor names lost roughly $1.3 trillion in value as the PHLX Semiconductor Index slid 10.3%, its biggest single-day drop since March 2020. Nvidia shed about 6%, Micron was down 13%, and Advanced Micro Devices lost nearly 11%.
Broadcom slid again. The stock fell 7.9% on Friday, down almost 20% in two days after its results and outlook didn’t meet big hopes for custom AI chips. “Very high expectations meeting a market that wanted perfection,” said Matt Britzman, senior equity analyst at Hargreaves Lansdown. Reuters
Some strategists pushed back on the idea of a broken trade. Ohsung Kwon, chief equity strategist at Wells Fargo, told Reuters the semiconductor sector was “way overbought,” but he doesn’t think the chip bull market is over. Warren Pies, co-founder of 3Fourteen Research, told CNBC that equity markets don’t look like a full bubble, saying, “the metrics don’t back it up.” Reuters Investopedia
The selloff wasn’t limited to chips. The VIX jumped 40% to hit a two-month high, according to CNN Newsource. Gold lost over 3.5%. Bitcoin slipped under $60,000. Meta fell 5.5% after reports it was looking to raise equity for its AI buildout.
Traders are watching next week’s inflation print and any Fed signals, with worries building that rates could stay high—or even go up—right as investors look at rising AI spending. If inflation comes in softer, that could bring buyers back into the big winners from the last rally. But for now, the focus has shifted from chasing growth to questioning the price tag.
