New York: The U.S. stock market had its worst day since October Friday as a sell-off in big technology companies weighed down the broader market and a strong jobs report boosted expectations that the Federal Reserve will be forced to hike interest rates at some point this year.
The S&P 500 sank 2.6%, its biggest one-day drop since October 10, when the Trump administration threatened to impose a 100% tariff on imported goods from China. The losses helped push the benchmark index to its first losing week in the last 10.
The Dow Jones Industrial Average fell 1.4%, while the Nasdaq composite slumped 4.2%. Tech stocks dragged the broader market lower as companies that had powered the S&P 500 to a series of records the past two months saw losses. Nvidia fell 6.2%, Broadcom dropped 7.9% and Micron Technology slid 13.3% for the biggest loss among stocks in the S&P 500.
Shares in Meta fell 5.5% following a published report that the social media giant may seek to do a new stock offering to raise funds for spending on AI infrastructure. Stocks within the S&P 500 were not far from being evenly split between gainers and losers. But, many of the bigger tech stocks have pricey values that tend to give them outsized influence on the broader market.
Meanwhile, bond yields jumped after a report showed the U.S. added a surprising 172,000 jobs in May, according to the Labor Department. It is the latest report showing that employment remains solid, despite the squeeze inflation is putting on businesses and consumers.
The latest reading on employment comes two weeks before Kevin Warsh heads his first policy meeting as chair of the Fed. Policymakers are widely expected to keep rates steady at the June 16-17 meeting despite pressure from President Donald Trump to lower borrowing costs. Longer-term, the market sees a better than 60% chance the Fed will push rates higher by the end of the year, according to CME FedWatch, and little to no chance of a cut.
“Any hopes of a Fed rate cut have effectively been eliminated with this morning’s strong jobs report,” said Ronald Temple, chief market strategist at Lazard, in a research note. The yield on the 10-year Treasury rose to 4.54% from 4.50% just before the report was released. The yield on the 2-year Treasury, which more closely tracks the Fed’s actions, jumped to 4.16% from 4.04% just prior to the report.
