Wall Street ends sharply lower as chips slide, jobs data fuels rate hike fears

NEW YORK – Wall Street’s nine-week winning streak ended with a thud on June 5, as red-hot technology stocks suffered their largest daily decline in 2026 after a hot May jobs report fuelled fears of a hawkish policy pivot from the US Federal Reserve.

Selling was concentrated among chip stocks and other technology favourites that have surged higher in recent weeks as the Nasdaq Composite Index and S&P 500 rose repeatedly to fresh highs.

All three major US stock indexes closed sharply lower, with plunging chip stocks dragging the tech-laden Nasdaq down by its largest one-day percentage loss since 2025.

The S&P 500 ended its nine-week run of Friday-to-Friday gains, its longest weekly winning streak since one that ended in December 2023.

“After the record run we’ve seen the last nine weeks in equities, specifically tech and semiconductors, the dam just broke today,” said Ryan Detrick, chief market strategist at Carson Group in Omaha.

“Obviously, the stronger-than-expected jobs report puts the Fed in a tough spot regarding any interest rate cut for the rest of the year. And the market is throwing a fit by hitting the big winners so far this year.”

Rising interest rates and the Iran war weighed on sentiment heading into the weekend, but many investors said they expected tech stocks to continue rallying.

“The market reaction today was more driven by positioning rather than fundamentals,” said Ohsung Kwon, chief equity strategist at Wells Fargo. “The semiconductor sector was way overbought. That’s why we’re seeing the sell-off. I don’t think it’s the end of the semi-bull market.”

The US economy added 172,000 jobs in May, according to the US Labour Department, more than double analyst expectations, while the unemployment rate held firm at 4.3 per cent. The robust report was double-edged: It provided reassurance of US economic health, but all but killed any hopes of an interest rate cut from the Fed in the near future.

Financial markets are pricing in a growing likelihood of a rate increase at the conclusion of the Fed’s December meeting, according to CME’s FedWatch tool.

Fading hopes for a near-term resolution to the Middle East war and reopening the Strait of Hormuz are stirring fears that energy price pressures could morph into wider, systemic inflation.

Iran reaffirmed its support for Hezbollah and demanded that Israel withdraw its troops from southern Lebanon, further complicating efforts to secure a near-term peace deal that would include the resumption of traffic through the crucial strait.

US President Donald Trump’s administration has negotiated three truces, and while fighting has been greatly reduced, the two sides continue to trade air strikes.

According to preliminary data, the S&P 500 lost 199.64 points, or 2.63 per cent, to end at 7,384.67 points, while the Nasdaq Composite lost 1,117.38 points, or 4.16 per cent, to 25,713.58.

The Dow Jones Industrial Average fell 684.53 points, or 1.33 per cent, to 50,877.40.

Nvidia, the largest company by market value, fell sharply, as did smaller rivals Intel, Micron, AMD and Broadcom.

Lululemon Athletica slumped after the athletic apparel maker cut its annual profit forecast and projected second-quarter earnings well below Wall Street estimates. Cooper Companies rose after the contact lens maker beat estimates for second-quarter results.

Cryptocurrency firms Coinbase and Strategy were pulled lower by Bitcoin’s sharp drop.

S&P Global said it would not change the eligibility requirements for its major indexes, which effectively rules out a swift entry for Elon Musk’s SpaceX to the benchmark S&P 500 after it goes public in what would be the world’s biggest initial public offering.

S&P Dow Jones Indices will announce the results following its rebalancing after markets close. Chipmaker Marvell Technology, which boasts over US$270 billion (S$348.5 billion) in valuation, is among the contenders to be added to the benchmark index. REUTERS