Stocks Plunge on Tech Sector Decline, Labor Data Raises Concerns of Imminent Interest Rate Hikes

Wall Street's Nine-Week Winning Streak Comes to an End

Wall Street's nine-week winning streak ended abruptly on Friday, as technology stocks suffered their largest daily decline since April 2025. The selling was concentrated among chip stocks and other technology favorites that had surged higher in recent weeks, causing the Nasdaq Composite Index and S&P 500 to close sharply lower.

The Philadelphia SE Semiconductor Index, which is heavily weighted with chip stocks, suffered its largest one-day percentage plunge since March 2020, erasing more than $1 trillion in stock market value. The S&P 500 also ended its nine-week run of Friday-to-Friday gains, its longest weekly winning streak since one that ended in December 2023.

The hot May jobs report, which showed the U.S. economy added 172,000 jobs, more than double analyst expectations, fueled fears of a hawkish policy pivot from the U.S. Federal Reserve. The robust report provided reassurance of U.S. economic health, but all but killed any hopes of an interest rate cut from the Fed in the near future.

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Financial markets are pricing in a 42.7% likelihood of a rate hike at the conclusion of the Fed's December meeting, according to CME's FedWatch tool. The prospect of rising interest rates and the ongoing Iran war weighed on sentiment heading into the weekend.

The Dow Jones Industrial Average fell 695.15 points, or 1.35%, to 50,866.78, while the S&P 500 shed 200.57 points, or 2.64%, to 7,383.74. The Nasdaq Composite lost 1,121.53 points, or 4.18%, to 25,709.43. Among the 11 S&P 500 sectors, tech plummeted 5.8%, while consumer staples led the percentage gainers.

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Lululemon Athletica slumped 8.6% after the athletic apparel maker cut its annual profit forecast and projected second-quarter earnings well below Wall Street estimates. Cooper Companies rose 8.6% after the contact lens maker beat estimates for second-quarter results.

Cryptocurrency firms Coinbase and Strategy fell 7.1% and 6.9%, respectively, weighed by bitcoin's 4.1% drop. S&P Global said it would not change the eligibility requirements for its major indices, effectively ruling 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.

Declining issues outnumbered advancers by a 3.14-to-1 ratio on the NYSE, while the Nasdaq saw a 3.48-to-1 ratio. The S&P 500 posted 14 new 52-week highs and three new lows, while the Nasdaq Composite recorded 83 new highs and 178 new lows. Volume on U.S. exchanges was 22.89 billion shares, compared with the 20.29 billion average for the full session over the last 20 trading days.