S&P 500 Sheds $1.8T as Jobs Data Triggers Rate-Hike Fears
SkimNews Take
While the point drop is a historical record, the percentage decline is not, illustrating how absolute market movements become larger as overall valuations increase.
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- S&P 500 members lost $1.8 trillion in market value on Friday, with the index falling 2.6% — its worst day since Oct. 10 — while the Nasdaq Composite plunged 1,121+ points (biggest one-day point drop on record) and 4.2% (biggest percentage drop since April 10, 2025).
- Strong May jobs data ignited the selloff, with investors worried a strengthening labor market gives the Federal Reserve less justification to cut rates; markets have been steadily pricing in rate hikes since the Iran conflict, according to CME Group data.
- President Trump posted on Truth Social that "With a great Jobs Report, like just announced, stocks should go up, not down," adding "Growth does not mean inflation!"
- Micron Technology had surged 170% between the end of March and Thursday's close, becoming the 12th company to reach a $1 trillion market cap, but the semiconductor rally lost steam after Broadcom's latest earnings left investors disappointed.
- Interactive Brokers chief market strategist Steve Sosnick said Broadcom's "guidance came up short" and "punctured a lot of people's belief that any company that might benefit from AI spending was effectively bulletproof."
- The Financial Times reported that Meta Platforms was contemplating a major equity raise to fund AI spending, similar to a recent deal by Alphabet, adding to Friday's selling pressure.
- Bonds and crude oil also sold off, with the 10-year Treasury yield rising 4 basis points to 4.518%; Interactive Brokers economist Jose Torres said the combination of yields up and oil down signals investors are "scared that the Fed is going to hike."
Why it matters: A strong labor market now translates to bad news for stocks, as economic strength reduces the odds of Fed rate cuts — a dynamic that just punctured the semiconductor-led AI rally after months of near-parabolic gains. With Broadcom's disappointing guidance marking the first serious challenge to the belief that AI beneficiaries are bulletproof, the two-month sprint that made Micron the 12th $1T company hit its first real air pocket, and Meta's reported equity-raise plans suggest Big Tech's AI spending may soon require diluting shareholders.
