A broad selloff in technology stocks accelerated on Wednesday, with the Nasdaq Composite falling approximately 4% as investors recalibrated expectations for Federal Reserve interest rate policy following stronger-than-expected economic data.
The decline extended a recent period of volatility triggered by a Labor Department report showing that 172,000 jobs were added in May, more than double the 80,000 consensus estimate. The employment data effectively eliminated market expectations for near-term rate cuts, with traders now pricing in an increased probability of rate hikes.
“Any hopes of a Fed rate cut have effectively been eliminated,” said Ronald Temple, chief market strategist at Lazard, according to market commentary, commenting on the June 5 data release. The 10-year Treasury yield climbed to 4.55%, its highest level in several months, as bond markets adjusted to the revised economic outlook.
Semiconductor stocks experienced among the steepest declines. The Philadelphia Semiconductor Index fell 5.7%, with individual companies including Broadcom, Arm Holdings, and Advanced Micro Devices declining between 8% and 17% in recent sessions. Nvidia and Tesla each fell more than 6% following the jobs report.
The selloff marked a significant reversal for technology shares that had powered the Nasdaq to an 11% year-to-date gain through May. Market observers noted that the rotation out of high-multiple technology names could continue as investors reassess the cost of capital implications for growth-focused companies.
Broader market indicators reflected the shift in sentiment. The S&P 500 snapped a nine-week winning streak with a 2.6% weekly decline through June 5, its largest weekly drop since May 2025. The US dollar index rose 0.6% to 100.04, while gold futures fell 3.6% to $4,345 per ounce.
Energy markets showed mixed signals. West Texas Intermediate crude fell to around $90 per barrel, pressured by expectations that an Iran-US agreement could lead to increased oil flows through the Strait of Hormuz. The Organization for Economic Cooperation and Development cut its global growth forecast for 2026 to 2.8% from 3.4%, citing Middle East tensions as a factor.
The Cboe Volatility Index, often referred to as Wall Street’s fear gauge, rose approximately 8% to 20.40 during the trading session, reflecting increased market uncertainty. The Federal Reserve’s next scheduled meeting is set for late July, with traders monitoring upcoming economic data releases for additional signals on the rate path.