U.S. Markets Slide as Strong Jobs Data Revives Fed Rate-Hike Fears

Yahoo! Finance Canada reported Friday that a blowout May jobs print reignited Fed rate-hike fears, pushing U.S. equities lower and hammering technology shares across the board.

Markets React to a Surprisingly Hot Labor Market

U.S. employers added 172,000 jobs in May, nearly double the roughly 88,000 economists had anticipated. The unemployment rate held flat at 4.3%. That combination proved unsettling for equity markets. The S&P 500 dropped around 0.7% in early trading. The Nasdaq Composite fell more than 1%. The Dow Jones Industrial Average managed only a slight decline by comparison.

Also Read: What the Fed’s Rate Decision Means for Risk Assets

Fed Rate Hike Now Fully Priced In by Traders

Traders moved quickly to price in at least one Fed rate hike before year-end following the data. The strong labor backdrop, combined with still-elevated inflation, has given the central bank little reason to ease. This dynamic puts Fed Chair Jerome Powell’s successor, incoming chair Kevin Warsh, in a politically charged position. President Trump has publicly and repeatedly pushed for rate cuts. Markets are not listening.

The S&P 500 was also at risk of snapping a remarkable run. The index had been chasing a tenth consecutive week of gains, a feat not seen since 1985.

Chip Stocks Bear the Brunt of the Sell-Off

Tech was the day’s worst-performing sector, with chipmakers suffering the sharpest losses. Broadcom (AVGO) extended Thursday’s brutal decline, falling an additional 4.6% after its AI chip revenue outlook disappointed investors. Nvidia (NVDA) shed more than 3%. AMD, Intel, and Micron each dropped more than 6%. The broader AI trade, which had powered much of the market’s recent momentum, showed fresh signs of fragility.

Also Read: Broadcom’s AI Chip Outlook Rattles Semiconductor Sector

Hormuz Closure Adds Another Layer of Risk

Geopolitical uncertainty compounded Friday’s pressure. The effective closure of the Strait of Hormuz has removed roughly 14 million barrels per day from global supply. Crude oil and Brent futures are up 30% to 40% since hostilities began. Marine fuel prices in Singapore surged as much as 134% at their peak, though they have since settled to a gain near 55%. Larry Johnson, head of freight at commodities house Mercuria, warned that regional marine fuel outages could emerge by July, with shortages potentially hitting major shipping hubs by August or September. Ten percent of the global fleet could sit idle as a result.

President Trump has described U.S.-Iran negotiations as being in their “final” stages, but reports of stalled talks kept sentiment cautious.

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