Wall Street Experiences Sharply Decline Amid Weak Performance in Semiconductor Stocks and Rising Concerns Over Potential Interest Rate Hikes

Wall Street's Winning Streak Ends with a Thud as Tech Stocks Plummet

Wall Street's nine-week winning streak came to an abrupt end on Friday, as the technology sector suffered its largest daily decline since April 2025. The sell-off was sparked by the release of a hot May jobs report, which fueled fears of a hawkish policy pivot from the U.S. Federal Reserve.

The Philadelphia SE Semiconductor Index, a key benchmark for the tech sector, suffered its largest one-day percentage plunge since March 2020, erasing more than $1 trillion in stock market value. The index's decline was particularly pronounced, with many of the sector's top performers, including chip stocks and other technology favorites, experiencing significant losses.

The S&P 500, which had risen to fresh highs in recent weeks, ended its nine-week run of Friday-to-Friday gains, its longest weekly winning streak since one that ended in December 2023. The index fell 200.57 points, or 2.64%, to 7,383.74, while the Nasdaq Composite lost 1,121.53 points, or 4.18%, to 25,709.43.

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The U.S. economy added 172,000 jobs in May, according to the Labor Department, more than double analyst expectations, while the unemployment rate held firm at 4.3%. The robust report was double-edged, providing reassurance of U.S. economic health but all but killing any hopes of an interest rate cut from the Fed in the near future.

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 potential for higher interest rates weighed on sentiment heading into the weekend, with many investors expecting tech stocks to continue rallying.

However, the tech sector's sharp decline was not solely driven by interest rates. The sector was also impacted by the ongoing conflict in the Middle East, which has been weighing on energy prices and fueling inflation concerns. Iran's reaffirmation of its support for Hezbollah and demand that Israel withdraw its troops from southern Lebanon further complicated efforts to secure a near-term peace deal.

Key Market Metrics

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Among the 11 S&P 500 sectors, tech plunged 5.8%, while consumer staples led the percentage gainers. Nvidia, the largest company by market value, lost 6.2%, while Intel, Micron, AMD, and Broadcom slid between 7.9% and 13.3%. Lululemon Athletica, which had cut its annual profit forecast and projected second-quarter earnings well below Wall Street estimates, slumped 8.6%.

Declining issues outnumbered advancers by a 3.14-to-1 ratio on the NYSE, with 132 new highs and 249 new lows. On the Nasdaq, 1,074 stocks rose and 3,737 fell as declining issues outnumbered advancers by 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.