Hot Jobs Report, Rising Rates Send Wall Street's Tech Favorites Sprawling

💡 A strong jobs report and rising interest rates sent tech stocks plummeting.

The US labor market delivered a surprise on the upside, with nonfarm payroll employment rising by a whopping 517,000 in May, defying expectations of a more modest gain. The unemployment rate, meanwhile, slid to 3.4%, its lowest level since 1969. The Federal Reserve, however, remained steadfast in its commitment to fighting inflation, with Fed Chair Jerome Powell signaling that interest rate cuts remain a distant prospect.

Tech Stocks Take a Beating

The jobs report's unexpected strength, coupled with Powell's hawkish tone, sent tech stocks reeling. $NVDA dropped 5.3% to $644.11, while $AAPL fell 4.2% to $175.45. The Nasdaq Composite Index, which had been flirting with the 15,000 level, gave up 2.5% to 14,442.35. The S&P 500 Technology sector, meanwhile, slumped 3.1% to 2,443.19.

Growth Stocks Get Hammered

Growth stocks, in particular, felt the heat, with companies like $NFLX and $SHOP getting pummeled. The iShares North American Tech ETF (IGM) plummeted 4.1% to $444.23, while the First Trust Dow Jones Internet Index Fund (FDN) fell 3.6% to $145.45.

Markets React to Powell's Comments

Powell's comments, which emphasized the need for sustained inflation declines before the Fed considers easing policy, sent bond yields soaring. The 10-year Treasury yield surged to 4.8%, its highest level since October 2023, while the 2-year Treasury yield jumped to 4.45%. The dollar, meanwhile, strengthened against a basket of major currencies, with the US Dollar Index (DXY) rising 0.7% to 102.55.

What It Means for Investors