Wall Street ends sharply lower as chips slide, jobs data fuels rate hike fears
Wall Streetโs nine-week winning streak ended with a thud on Friday, as red-hot technology stocks suffered their largest daily decline this year after a hot May jobs report fueled fears of a hawkish policy โpivot from the US Federal Reserve. Selling was concentrated among chip stocks and other technology favorites that have surged higher in recent weeks as the โNasdaq Composite Index and S&P 500 rose repeatedly to fresh highs. All three major US stock indexes closed sharply lower, with plunging chip stocks dragging the tech-laden Nasdaq down by its largest one-day percentage โloss since last year. The S&P 500 ended its nine-week run of Friday-to-Friday gains, its longest weekly winning streak since one that ended in December 2023. โAfter the record run weโve seen the last nine weeks in equities, specifically tech and semiconductors, the dam just broke today,โ said Ryan Detrick, chief market strategist at Carson Group in Omaha. โObviously, the stronger-than-expected jobs report puts the Fed in a tough spot regarding any interest rate cut for the rest of the year. And the market is throwing a โfit by hitting the big winners so far this โ year.โ Rising interest rates and the Iran war weighed on sentiment heading into the weekend, but many investors said they expected tech stocks to continue rallying. โThe market reaction today was more driven by positioning rather than fundamentals,โ said Ohsung Kwon, chief equity strategist โ at Wells Fargo. โThe semiconductor sector was way overbought. Thatโs why weโre seeing the selloff. I donโt think itโs the end of the semi bull market.โ The US economy added 172,000 jobs in May, according to the Labor Department, more than double analyst expectations, while the unemployment rate held firm at 4.3 per cent. The robust report was double-edged: it provided reassurance of โUS โeconomic health, but all but killed any hopes of an interest rate cut from the โFed in the near future. Financial markets are pricing in a โgrowing likelihood of a rate hike at the conclusion of the Fedโs December meeting, according to CMEโs FedWatch tool. Fading hopes for a near-term resolution to the Middle East war and reopening the Strait of Hormuz are stirring fears that energy price pressures could morph into wider, systemic inflation. According to preliminary โdata, the S&P 500 lost 199.64 points, or 2.63pc, to end at 7,384.67 points, while โthe Nasdaq Composite lost 1,117.38 points, or 4.16pc, to 25,713.58. The Dow Jones Industrial Average fell โ684.53 points, or 1.33pc, to 50,877.40. Nvidia, the largest company by market โvalue, fell sharply, as did smaller rivals Intel, Micron, AMD and Broadcom. Lululemon Athletica slumped after the athletic apparel maker cut its โannual profit forecast and projected second-quarter earnings well below Wall Street โestimates. Cooper Companies rose after the contact lens โmaker beat estimates for second-quarter results. Cryptocurrency firms Coinbase and Strategy were pulled lower by bitcoinโs sharp drop. S&P Global said it would not change the eligibility requirements for its major indices, which effectively rules out a swift entry for Elon Muskโs SpaceX to the benchmark S&P 500 after it โgoes public in what would be the worldโs biggest initial โpublic offering. S&P Dow Jones Indices will announce the results following its rebalancing after markets close. Chipmaker Marvell Technology, which boasts over $270 billion โin valuation, is among the contenders to be added to the benchmark index.