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Fri, 05 Jun 2026
08:55:11 pm
Fri, 05 Jun 2026
08:55:11 pm
Synopsis
Nasdaq crashes nearly 3% as strong US jobs data fuels Federal Reserve rate hike fears. Nvidia, AMD, Intel and AI stocks tumble while Treasury yields surge. Read the complete market analysis and outlook.
Wall Street witnessed one of its sharpest technology-driven selloffs of 2026 on June 5 as investors reacted to a surprisingly strong US jobs report that reignited fears of another Federal Reserve interest rate hike. The Nasdaq Composite plunged nearly 3%, while the S&P 500 and Dow Jones Industrial Average also closed sharply lower as traders rushed to reduce exposure to high-growth technology and artificial intelligence stocks.
The market reaction came after the latest nonfarm payroll report showed that the US economy added 172,000 jobs in May, far exceeding analyst expectations of approximately 88,000 jobs. While strong employment data is generally viewed as a positive sign for economic growth, investors worried that continued labor market strength could keep inflation elevated and force the Federal Reserve to maintain a tighter monetary policy stance for longer.
The result was a broad-based selloff across AI stocks, semiconductor companies, cryptocurrencies, and other growth-focused sectors that have benefited from expectations of lower interest rates over the past year.
| Index | Performance |
|---|---|
| Nasdaq Composite | -2.93% |
| S&P 500 | -1.74% |
| Dow Jones | -0.83% |
| Bitcoin | -4.31% |
| Nvidia | -4%+ |
| AMD | -8%+ |
| Micron | -8%+ |
| Intel | -8%+ |
Technology stocks accounted for the majority of the decline as investors rotated toward defensive sectors and reduced exposure to highly valued growth companies.
The biggest catalyst behind Friday's market decline was the release of stronger-than-expected employment data.
| Indicator | Actual | Forecast |
|---|---|---|
| Nonfarm Payrolls | 172,000 | 88,000 |
| Unemployment Rate | 4.3% | 4.3% |
| Private Payrolls | 122,000 | 120,000 |
| Wage Growth | 3.4% | 3.6% Prior |
The report highlighted continued resilience in the US labor market despite elevated borrowing costs and persistent inflation concerns.
Investors interpreted the data as reducing the likelihood of future rate cuts while increasing the probability of another Federal Reserve hike before the end of 2026.
At first glance, stronger job creation should support markets. However, investors are currently focused on inflation and interest rates.
A strong labor market often leads to:
If inflation remains above the Federal Reserve's target, policymakers may choose to keep rates elevated or even raise them further.
Higher interest rates generally hurt technology stocks because much of their valuation depends on future earnings growth.
Artificial intelligence and semiconductor stocks suffered the biggest declines as investors reassessed valuations in a higher-rate environment.
| Company | Move |
|---|---|
| Nvidia | -4%+ |
| AMD | -8%+ |
| Micron Technology | -8%+ |
| Intel | -8%+ |
| Broadcom | -4%+ |
Nvidia, which has been one of the biggest beneficiaries of the AI boom, lost significant market value as investors locked in profits following months of strong gains.
AMD, Micron, and Intel experienced even larger percentage declines as concerns spread across the broader semiconductor industry.
The AI selloff actually began earlier in the week when Broadcom issued guidance that disappointed investors.
Market participants had become accustomed to explosive AI-related revenue growth across the semiconductor sector. Any sign of slowing momentum has the potential to trigger significant profit-taking.
Broadcom's outlook combined with stronger economic data created the perfect environment for a correction in AI-related stocks.
Bond markets reacted immediately to the employment report.
| Bond | Yield Move |
|---|---|
| 5-Year Treasury | +7.6 bps |
| 10-Year Treasury | +5.5 bps |
| 30-Year Treasury | +4 bps |
Higher Treasury yields reduce the attractiveness of speculative assets and growth stocks, contributing to the pressure on technology shares.
Market participants now expect at least one quarter-point Federal Reserve rate hike before the end of the year.
Risk aversion extended beyond equities and into cryptocurrencies.
Bitcoin dropped more than 4% and slipped below its widely watched 200-day moving average for the first time since 2023.
| Metric | Value |
|---|---|
| Current Price | ~$61,000 |
| Weekly Decline | -14% |
| Monthly Decline | -21% |
| Record High | ~$125,000 |
Historically, Bitcoin falling below its 200-day moving average has often marked periods of heightened volatility and uncertainty.
Investors are also navigating several global macroeconomic challenges simultaneously.
These risks continue to influence investor sentiment and contribute to elevated market volatility.
| Sector | Outlook |
|---|---|
| AI Stocks | Bearish |
| Semiconductors | Bearish |
| Technology | Bearish |
| Cryptocurrencies | Bearish |
| Growth Stocks | Bearish |
| Sector | Outlook |
|---|---|
| Healthcare | Positive |
| Financials | Positive |
| Consumer Staples | Positive |
| Defensive Stocks | Positive |
The market rotation from growth into defensive sectors remained one of the most notable trends throughout the session.
Several key events could determine the next major move for global markets.
These events will provide further clues regarding inflation trends and the future path of monetary policy.
The current correction does not necessarily indicate weakness in the US economy. Instead, it reflects investor concerns that economic strength could delay monetary easing.
The long-term AI investment story remains intact, supported by continued demand for data centers, cloud infrastructure, semiconductor capacity, and enterprise AI adoption.
However, the market is increasingly shifting its focus from growth narratives toward interest rates, valuations, and earnings sustainability.
As a result, volatility across AI and technology stocks is likely to remain elevated in the coming weeks.
The Nasdaq plunged nearly 3% on June 5, 2026, after a stronger-than-expected US jobs report fueled expectations of a Federal Reserve rate hike later this year. Nvidia, AMD, Micron, Intel, and other AI-linked stocks led the decline as investors reassessed growth-sector valuations amid rising Treasury yields and persistent inflation concerns. While the long-term outlook for artificial intelligence remains strong, markets are entering a phase where interest rates, inflation data, and Federal Reserve policy decisions could play a larger role in determining stock performance than AI enthusiasm alone.
The Nasdaq declined after strong US employment data increased expectations that the Federal Reserve may raise interest rates later this year.
The US economy added 172,000 jobs, significantly above analyst expectations of around 88,000.
Higher interest rate expectations reduce the appeal of growth-oriented technology companies, leading investors to take profits in AI stocks.
AMD, Micron, and Intel fell more than 8%, while Nvidia and Broadcom declined over 4%.
Most analysts believe the long-term AI growth story remains intact, although valuations may face pressure if interest rates stay elevated.
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