Nasdaq and S&P 500 take worst day hits

Nasdaq and – Stocks and risk assets sold off sharply Friday after strong jobs data raised expectations that the Federal Reserve may delay or abandon rate cuts and could even hike later this year. The Nasdaq fell more than 4% in its worst day since April 2025 as AI and semi

Friday started like a reprieve for markets. By the afternoon, it felt more like a warning.

The Nasdaq Composite fell 4.18%, its worst day since April 2025. The move was fast and punishing—one session erasing part of the momentum built over recent weeks. The S&P 500 dropped 2.64%. its worst day since October. falling into the red for the week and snapping a nine-week winning streak. Even the Dow, far less tied to tech, slipped 695 points, or 1.35%, marking its worst day in about three months.

What turned the mood wasn’t a sudden corporate scandal or a geopolitics headline. It was a jobs report—strong enough to change what traders think the Fed will do next.

The economy added 172,000 jobs in May, smashing expectations, according to data released Friday from the Bureau of Labor Statistics. The strong labor gains also came after recent data had shown inflation was heating up because of the oil spike from the war with Iran. For markets, that combination sounded like the kind of backdrop that doesn’t reward rate cuts.

Traders now see a higher chance of an interest-rate hike later this year: a 43% chance for the Fed to hike its benchmark lending rate in December. up from 26% a month ago. according to CME FedWatch. The shift landed right on the nerves Wall Street has been watching. Wall Street’s fear gauge, the VIX, surged 40% and hit its highest level in two months.

Treasury yields jumped higher as bond prices fell. The 10-year yield, which influences the mortgage rates, rose to 4.54%. Higher Treasury yields can pressure stocks—because they raise the cost of capital in a market that has been pricing in easier money.

“In the near term the data confirms that Fed easing is off the table this year, and markets continue to worry that the next move could be a hike,” James McCann, senior economist for investment strategy at Edward Jones, said in a note.

When rates start moving like this, it doesn’t stay confined to traditional charts.

Bitcoin tumbled more than 5% and dipped below $60,000, hitting its lowest level since October 2024. The cryptocurrency dropped more than 17% this week after Strategy disclosed it sold some bitcoin for the first time since 2022. Bitcoin is down more than 50% since hitting a record high in October. Gold fell more than 3.5%. effectively erasing gains for this year—another sign investors were reaching less for assets that don’t pay income.

The risk-off tone also surfaced inside tech—especially the stocks that have been most tied to the AI boom.

After a nine-day winning streak. the Nasdaq fell for the third day in a row. pressured by a sell-off in semiconductor chip stocks. A popular exchange-traded fund tracking memory chip stocks sank 15%. Broadcom (AVGO) reported weaker-than-expected guidance for chip revenue in the third quarter, sending shares down 12.59% Thursday and 7.92% Friday.

Ross Mayfield, an investment strategist at Baird, warned that the market’s momentum may have outpaced reality.

“A parabolic move like most of these stocks have been experiencing is not sustainable under perpetuity,” Mayfield said. “You’re pricing in basically perfection. and I think the Broadcom results. and kind of underwhelming guidance. are an example of that. ” Mayfield said. “It doesn’t take a lot to spark a reversal.”.

Tech pressure didn’t stop with chips. Tech stocks extended losses in the afternoon after Meta (META) dropped 5.5% on reports it is seeking to raise equity to fund its AI buildout.

Even the daily trading logic around oil and yields shifted. Oil prices were lower Friday: Brent crude futures fell about 2% to just above $93 per barrel. Treasury yields have traded in lock-step with oil prices in recent weeks—rising when oil rises and then falling when oil falls—but that relationship changed Friday. Treasury yields jumped higher despite the fall in oil prices. signaling traders were focusing on the strong jobs data and how the labor market might be stabilizing. which could heighten the Fed’s focus on inflation.

Nigel Green, CEO at deVere Group, put it bluntly: the jobs report mattered.

“Markets have spent months searching for a reason for the Federal Reserve to cut rates. Today’s jobs report gave policymakers a reason not to do so,” Green said in a note.

“One report does not make policy, but a report of this magnitude changes probabilities,” Green said. “And markets have recognized that immediately.”

The Fed question is no longer just theoretical. McCann at Edward Jones said the bar for rate hikes remains high. and there would need to be signs of a “more persistent spike in inflation” for the Fed to move towards a tightening cycle. He also pointed to leadership and internal tension: new Fed Chair (Kevin) Warsh will face a challenging balancing act at his first meeting given the complicated balancing act facing Fed policy at present and well-documented divisions on the FOMC rate-setting committee.

Market sentiment moved with the numbers. CNN’s Fear and Greed Index, a proxy for market sentiment, dipped into “fear,” a swift change from recent weeks. The F&G Index had been in “greed” since April 15, when the S&P 500 hit its first record high during the war with Iran.

So the day’s story has two faces: a strong jobs report that pushed rate expectations higher, and a market that had to confront what that means for everything priced on cheap money—from semiconductors and AI enthusiasm to bitcoin, and even gold.

Nasdaq S&P 500 jobs data May 172 000 Federal Reserve rate hike odds VIX surge 40% AI stocks semiconductor selloff Broadcom guidance Bitcoin below $60 gold prices fall