Wall Street Declines Amid Chip Sector Weakness, Jobs Report Fuels Concerns of Aggressive Monetary Policy

Market Tumbles as Semiconductors Plunge and Robust Employment Report Fuels Hawkish Policy Fears

Wall Street experienced a significant downturn on Friday, with all three major U.S. stock indexes in negative territory. The tech-heavy Nasdaq suffered its largest one-day percentage drop since October 10, falling 3.1% to 26,007.35. The S&P 500, poised to snap its nine-week run of Friday-to-Friday gains, lost 1.82% to 7,446.24, while the Dow Jones Industrial Average dropped 0.85% to 51,122.68.

The sharp decline in the Nasdaq was largely driven by a 8.1% plunge in semiconductors, their steepest daily drop since the "Liberation Day" tariff rout. Over the last three days of selloffs, tech and chips have tumbled more than 7.5% and 9.1%, respectively. The Dow was set for a nominal gain on the week, despite the broader market decline.

The U.S. economy added 172,000 jobs in May, according to the Labor Department, more than double analyst expectations. However, the robust report has fueled fears of a hawkish policy pivot from the Federal Reserve. Financial markets are pricing in a 42.8% likelihood of a rate hike at the conclusion of the Fed's December meeting, up from 38.2% on Thursday and 26.1% one month ago, according to CME's FedWatch tool.

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The CBOE Market Volatility Index surged to a two-week high, reflecting growing fears of a 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.

Major tech companies, including Nvidia and Intel, led the decline, with losses ranging from 5.6% to 10.5%. Lululemon Athletica slumped 8% after cutting its annual profit forecast, while Cooper Companies rose 7.6% after beating estimates for second-quarter results. Cryptocurrency firms Coinbase and Strategy dropped 9.5% and 11.2% as bitcoin tumbled 4.8%.

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Declining issues outnumbered advancers by a 2.8-to-1 ratio on the NYSE, with 108 new highs and 196 new lows. On the Nasdaq, 1,155 stocks rose and 3,548 fell as declining issues outnumbered advancers by a 3.07-to-1 ratio. The S&P 500 posted 14 new 52-week highs and three new lows, while the Nasdaq Composite recorded 76 new highs and 143 new lows.