Stocks Slump as Big Tech Sinks and Strong May Jobs Report Boosts Odds for Higher Interest Rates

💡 Big Tech stocks plummeted, while a robust May jobs report increased the likelihood of higher interest rates.

The stock market took a hit on Friday as a strong May jobs report heightened the prospect of higher interest rates, weighing on investor sentiment. The S&P 500 fell 2.1%, with $SPY sinking to a low of 382.45. Big Tech stocks, in particular, suffered a sharp decline, with $NVDA plummeting 5.3%.

Big Tech Slump

The technology sector led the market lower, with Amazon ($AMZN) and Microsoft ($MSFT) falling 3.4% and 2.8%, respectively. The tech-heavy Nasdaq Composite dropped 2.9%, its worst day since March. The slump in Big Tech stocks was largely driven by a decline in semiconductor stocks, with $NVDA and $TXN falling 5.3% and 4.1%, respectively.

Strong May Jobs Report

Meanwhile, the Labor Department reported a 390,000 increase in nonfarm payrolls in May, well above the 325,000 forecast. The unemployment rate ticked down to 3.5%, matching a 52-year low. The strong jobs report reignited concerns about inflation and the potential for the Federal Reserve to raise interest rates further.

Interest Rate Implications

The robust jobs report boosted the odds of a 50-basis-point rate hike at the Fed's June meeting, according to CME Group FedWatch. The 10-year Treasury yield rose to 4.1%, its highest level since October 2023. $TLT, which tracks Treasury bond prices, fell sharply as investors repriced the timing of the first rate cut.

What It Means for Investors