Stocks slump as Big Tech sinks and a strong May jobs report boosts odds
for higher interest rates
[June 06, 2026] By
DAMIAN J. TROISE and ALEX VEIGA
The U.S. stock market had its worst day since October Friday as a
sell-off in big technology companies weighed down the broader market and
a strong jobs report boosted expectations that the Federal Reserve will
be forced to hike interest rates at some point this year.
The S&P 500 sank 2.6%, its biggest one-day drop since October 10, when
the Trump administration threatened to impose a 100% tariff on imported
goods from China. The losses helped push the benchmark index to its
first losing week in the last 10.
The Dow Jones Industrial Average fell 1.4%, while the Nasdaq composite
slumped 4.2%.
Tech stocks dragged the broader market lower as companies that had
powered the S&P 500 to a series of records the past two months saw
losses. Nvidia fell 6.2%, Broadcom dropped 7.9% and Micron Technology
slid 13.3% for the biggest loss among stocks in the S&P 500.
Shares in Meta fell 5.5% following a published report that the social
media giant may seek to do a new stock offering to raise funds for
spending on AI infrastructure.
Stocks within the S&P 500 were not far from being evenly split between
gainers and losers. But, many of the bigger tech stocks have pricey
values that tend to give them outsized influence on the broader market.
Meanwhile, bond yields jumped after a report showed the U.S. added a
surprising 172,000 jobs in May, according to the Labor Department. It is
the latest report showing that employment remains solid, despite the
squeeze inflation is putting on businesses and consumers.
The latest reading on employment comes two weeks before Kevin Warsh
heads his first policy meeting as chair of the Fed. Policymakers are
widely expected to keep rates steady at the June 16-17 meeting despite
pressure from President Donald Trump to lower borrowing costs.
Longer-term, the market sees a better than 60% chance the Fed will push
rates higher by the end of the year, according to CME FedWatch, and
little to no chance of a cut.
“Any hopes of a Fed rate cut have effectively been eliminated with this
morning’s strong jobs report,” said Ronald Temple, chief market
strategist at Lazard, in a research note.
The yield on the 10-year Treasury rose to 4.54% from 4.50% just before
the report was released. The yield on the 2-year Treasury, which more
closely tracks the Fed’s actions, jumped to 4.16% from 4.04% just prior
to the report.
The Fed has been holding interest rates steady as it tries to gauge the
ongoing impact from rising inflation. Prices were already ticking higher
from the impact of tariffs. The U.S. war with Iran has essentially
blocked crude oil shipments from moving through the Strait of Hormuz.
[to top of second column] |
Specialist Anthony Matesic works at his post on the floor of the New
York Stock Exchange, Wednesday, June 3, 2026. (AP Photo/Richard
Drew)
 The price of Brent crude, the
international standard, fell 2% to settle at $93.09. It was about
$70 per barrel before the war. The surge in oil prices prompted a
jump in fuel prices. That has fueled a broader rise in inflation as
prices for anything being shipped move higher and threaten to slow
economic growth.
A measure of inflation preferred by the Fed showed that prices rose
3.8% overall in April. That marked the biggest increase in two
years.
Wall Street has been anticipating that negotiations to end the war
will eventually be successful. American and Iranian negotiators
reached a tentative deal last week to extend their ceasefire, but
the agreement has not been finalized.
The latest round of corporate earnings is coming to a close.
Lululemon slumped 8.6% after trimming its revenue and profit
forecasts.
Most reports from companies have been surprisingly good and helped
Wall Street on its record run. Encouraging profits and forecasts
helped overshadow lingering worries about the direction of the
economy amid tariffs and high energy costs because of the U.S. war
with Iran.
With earnings now in the background, analysts have been warning that
the tech companies benefiting from interest in artificial
intelligence may have become too expensive. That could result in a
slowdown for a market that has posted a solid gain in 2026, with the
S&P 500 up 7.9% for the year.
All told, the S&P 500 fell 200.57 points to 7,383.74 on Friday. The
Dow dropped 695.15 points to 50,866.78, and the Nasdaq lost 1,121.53
points to close at 25,709.43.
Markets were mixed in Europe after markets in Asia fell.
___
AP Business Writers Chan Ho-him and Matt Ott contributed to this
report.
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