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Stocks Slump as Big Tech Sinks 06/05 15:31
The U.S. stock market had its worst day since October as a sell-off in big
technology companies weighed down the broader market.
(AP) -- The U.S. stock market had its worst day since October as a sell-off
in big technology companies weighed down the broader market. Bond yields surged
as 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 slumped 2.6%
Friday, finishing with its first losing week in the last 10. The Dow Jones
Industrial Average fell 695 points, or 1.4%. The Nasdaq composite fell 4.2%.
Nvidia and Broadcom were among the heaviest weights on the market. The Labor
Department reported that employers added 172,000 jobs in May, roughly double
what forecasters had expected. Oil prices fell.
THIS IS A BREAKING NEWS UPDATE. AP's earlier story follows below.
Wall Street headed for its worst day in nearly eight months Friday as big
technology companies lost ground 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 was down 2.7% in late-afternoon trading, on pace for its first
losing week in the last 10 and its biggest one-day drop since October, when the
Trump administration threatened to impose a 100% tariff on imported goods from
China. The Dow Jones Industrial Average fell 773 points, or 1.5%, as of 3:18
p.m. Eastern. The Nasdaq composite slumped 4.4%.
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
6.3%, Broadcom dropped 7.6% and Micron Technology slid 12.7%.
Shares in Meta fell 6% 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 close to evenly split between gainers and
losers. But, many of the bigger tech stocks have pricey values that tend to
have an 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.
The Fed has been holding interest rates steady as it tries to gauge the
ongoing impact from rising inflation. Prices were already ticking higher from
the impact of tariffs. The U.S. war with Iran has essentially blocked crude oil
shipments from moving through the Strait of Hormuz.
The price of Brent crude, the international standard, fell 2% to settle at
$93.09. It was about $70 per barrel before the war. The surge in oil prices
prompted a jump in gasoline prices. That has fueled a broader rise in inflation
as prices for anything being shipped move higher and threaten to slow economic
growth.
A measure of inflation preferred by the Fed showed that prices rose 3.8%
overall in April. That marked the biggest increase in two years.
Wall Street has been anticipating that negotiations to end the war will
eventually be successful. American and Iranian negotiators reached a tentative
deal last week to extend their ceasefire, but the agreement has not been
finalized.
The latest round of corporate earnings is coming to a close. Lululemon
slumped 8.5% after trimming its revenue and profit forecasts.
Most reports from companies have been surprisingly good and helped Wall
Street on its record run. Encouraging profits and forecasts helped overshadow
lingering worries about the direction of the economy amid tariffs and high
energy costs because of the U.S. war with Iran.
With earnings now in the background, analysts have been warning that the
tech companies benefiting from interest in artificial intelligence may have
become too expensive. That could result in a slowdown for a market that has
surged in 2026, with the S&P 500 up 7.7% for the year.
Markets were mixed in Europe after markets in Asia fell.
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