Wall Street Ends Sharply Lower as Chips Slide, Jobs Data Fuels Rate Hike Fears

💡 US stocks plummeted as chipmakers led the decline, sparking fears of an interest rate hike.

The US stock market ended sharply lower on Wednesday, with the S&P 500 falling 3.2% and the tech-heavy Nasdaq Composite sliding 4.3%. The decline was led by chipmakers, with $NVDA tumbling 6.1% and $TXN falling 4.9%.

Tech Sector Weakness

The tech sector was the biggest loser, with many tech stocks declining sharply. $GOOGL and $AMZN both fell 4.5%, while $FB declined 3.8%. The sector's weakness was driven by a combination of factors, including concerns about a slowdown in IT spending and a decline in semiconductor sales.

Jobs Data Fuels Rate Hike Fears

The jobs data released on Wednesday also fueled fears of an interest rate hike. The US economy added 200,000 jobs in May, beating expectations of 175,000. The unemployment rate remained steady at 3.6%, but the wage growth data was stronger than expected, with average hourly earnings rising 0.3%. The strong jobs data suggests that the US economy is still growing, which could lead to higher interest rates in the future.

Rate Hike Expectations

The strong jobs data and the decline in the tech sector led to a rise in rate hike expectations. The probability of a 50-basis-point rate hike at the next Fed meeting increased to 60%, up from 40% just a week ago. The increased rate hike expectations led to a rise in the 10-year Treasury yield, which surged to 4.8%.

What It Means for Investors