NEW YORK, June 5, 2026 – Wall Street suffered a broad sell-off on Friday, driven by a stronger-than-anticipated jobs report that extinguished lingering hopes for a Federal Reserve rate cut. The Nasdaq Composite led the decline, plummeting 823.61 points, or 3.07%, to close at 26,007.35. The S&P 500 dropped 138.07 points, or 1.82%, to 7,446.24, while the Dow Jones Industrial Average sank 439.25 points, or 0.85%, ending at 51,122.68.
Jobs Data Shocks Markets
The Labor Department reported that nonfarm payrolls increased by 172,000 in May, significantly exceeding expectations. The unemployment rate held steady at 4.3%. Job gains were concentrated in leisure and hospitality, local government, and healthcare, while financial activities saw a decline. The report upended market expectations that the Fed would maintain its current stance, prompting a sharp recalibration of interest-rate expectations.
According to CME FedWatch data, the probability of a rate hike in December surged to 68.4%, up from 52% just a day earlier. Despite this, traders still anticipate a hold at the upcoming June meeting. “Barnburner of a print,” said Bradford Smith, portfolio manager at Janus Henderson Investors, referring to the payrolls numbers.
Treasury Yields Surge
Bond yields climbed sharply in response to the data. The 10-year Treasury yield rose to 4.54%, while the 2-year yield, which is particularly sensitive to Fed policy expectations, reached 4.16%. Higher yields typically weigh on growth stocks by reducing the present value of future earnings. “Any hopes of a Fed rate cut are off the table,” remarked Ronald Temple, chief market strategist at Lazard.
Chipmakers Lead the Rout
The Philadelphia semiconductor index tumbled 8.1%, marking its steepest decline since the so-called “Liberation Day” tariff-driven sell-off. Major chip stocks including Nvidia (NVDA), Broadcom (AVGO), and Micron (MU) all fell sharply. Traders cited concerns that the artificial intelligence trade had become overheated, with valuations stretched to unsustainable levels. “There are still questions about whether chip stock valuations are legitimate,” noted Paul Nolte, senior wealth adviser and market strategist at Murphy & Sylvest.
The sell-off in technology extended beyond semiconductors. Bitcoin continued its slide, dragging down crypto-linked names and adding to the pressure on stocks outside the mega-cap space. Lululemon (LULU) also fell after the retailer lowered its annual profit guidance, while Cooper Companies (COO) bucked the trend, rising on stronger-than-expected quarterly earnings.
Oil and Inflation Risks
Oil prices drew attention but did not set the overall tone for the session. Brent crude fell 2% to close at $93.09 a barrel, though it remained on track for a weekly gain amid fading optimism for a quick resolution to Middle East tensions. “A strong economy sits right next to new inflation risk from the Gulf,” said Gary Schlossberg, market strategist at Wells Fargo Investment Institute.
Market Outlook
Bears continue to highlight risks. Rising energy prices could keep inflation elevated, even with solid jobs data, potentially keeping the Fed cautious. If corporate earnings also disappoint, the blow could fall hardest on the market’s most expensive segments—chips, AI software, and other stocks priced on future profit expectations. Conversely, cooler inflation, falling oil, or softer economic data could pull yields back and relieve some pressure on stocks, but those signs remain scarce. By Friday’s close, traders had settled on one thing: another firm jobs report did nothing for the rate-cut hopes.
