Wall Street ended the week with a thud. The Nasdaq Composite plunged 4.18% on Friday — its steepest single-day decline since April 2025 — as a stronger-than-expected jobs report reignited fears that the Federal Reserve will keep rates higher for longer.
The S&P 500 fell 2.64% to 7,383.74, snapping a nine-week winning streak. The Dow Jones Industrial Average dropped 695 points, or 1.35%, to 50,866.78.
But the real damage was in semiconductors. The Philadelphia Semiconductor Index (.SOX) posted its worst single-day percentage drop since March 2020, erasing over $1 trillion in combined market capitalization. AI and chip stocks led the rout across the board.
The trigger: a hot jobs report
The Bureau of Labor Statistics reported that the U.S. economy added 172,000 nonfarm payrolls in May — nearly double the 85,000 consensus estimate. The unemployment rate held steady at 4.3%, and average hourly earnings rose 3.4% year-over-year.
"Good news is bad news" kicked in immediately. Treasury yields surged: the 10-year note climbed to ~4.55%, pressuring growth and tech stocks. Rate hike expectations flipped sharply — CME FedWatch data showed the probability of a 25-basis-point hike by December jumping from 52% pre-report to 68% post-report.
The strong labor market data gave the Fed more room to keep rates elevated, a scenario that hits high-valuation tech names hardest.
Chip stocks: the epicenter
Broadcom (AVGO) was ground zero. The stock fell another 7.9% on Friday after already plunging 12.6% on Thursday following its fiscal Q2 earnings report. Broadcom posted strong numbers — revenue up 48% YoY to $22.2 billion, AI revenue surging 143% — but failed to raise its AI guidance. For investors who had piled in ahead of results, that was enough to trigger a brutal sell-off.
Nvidia (NVDA) dropped 6.2% to $205.10, erasing roughly $300 billion in market cap in a single session. Micron Technology (MU) nosedived 13.3%. AMD and Intel both saw double-digit declines.
The carnage was compounded by a Financial Times report that Meta is exploring a multi-billion-dollar equity raise to fund its AI infrastructure spending. Meta shares fell 7% on the news, adding to the bearish tech narrative.
The fear gauge spikes
The CBOE Volatility Index (VIX) surged 39.7% to 21.51 — one of its largest single-day jumps in recent years. Levels above 20 signal elevated anxiety, though historically such spikes tend to mean-revert within days.
Analysts are starting to talk about a "June Swoon" after the S&P 500 pushed its limits following nine consecutive weeks of gains.
What's ahead
The calendar is light Monday and Tuesday, setting up a potential continuation of Friday's selling pressure. But all eyes are on Wednesday, June 10, when the May Consumer Price Index (CPI) lands. Consensus expectations call for monthly CPI of +0.5% and an annual rate of 4.2%. A hot print would reinforce the rate-hike narrative and could trigger another leg down.
Other data points this week:
- Thursday, June 11: Producer Price Index (PPI) and the ECB rate decision.
- Friday, June 12: University of Michigan Consumer Sentiment (June preliminary).
The bottom line
Friday was a sharp reminder that even a strong economy can be bad for stocks when it threatens to keep rates high. The jobs data confirmed the U.S. is nowhere near recession — but it also strengthened the Fed's case for staying restrictive.
The real test comes Wednesday with CPI. If inflation is cooling beneath the surface, the sell-off could prove to be a healthy reset. If it runs hot, the pain in tech and semiconductors may have further to go.
Volatility is back. Investors should buckle up for a bumpy week.
