Tech Tumbles as Blowout Jobs Report Spoils AI Rally
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- Broadcom shed 13% Wednesday evening after solid-but-uninspiring earnings, dragging memory stocks and other AI-trade names lower with it
- A blowout May jobs report at 8:30 a.m. ET sent Treasury yields spiking and slashed the implied odds of a rate cut later this year, weighing on perceived riskier assets
- President Trump posted on Truth Social to criticize the market's reaction to the strong jobs data
- The S&P 500 fell 1.05% and the Nasdaq dropped more than 2.2%, putting the S&P's bid for a 10th consecutive weekly gain at risk
- The momentum factor, the best-performing equity risk factor year-to-date in 2026, tumbled to the bottom of the daily performance table while low-volatility stocks — crushed for most of the year — enjoyed a rare reprieve
- The selloff is more likely a combination of factors than Broadcom alone, the article notes, since the chipmaker's earnings were already more than 40 hours old by mid-morning
Why it matters: The 2026 market's defining trade — AI-driven momentum — flipped from year's best risk factor to day's worst in a single session, with the Nasdaq off more than 2.2% and momentum names like Micron, Sandisk, and Marvell reversing course. A blowout May jobs report reset rate-cut expectations and triggered a rotation into low-volatility names, signaling traders are questioning whether the AI rally has further to go in the near term.
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