U.S. Stocks Slip Amid Tech Sell-Off and Strong Jobs Data
U.S. stocks fell on Friday as investor sentiment was weighed down by ongoing Middle East tensions and a weakening artificial intelligence trade. A strong May jobs report boosted Treasury yields and put additional pressure on equities.
Index Performance
At 10:38 ET (14:38 GMT), the S&P 500 dropped 0.9% to 7,514.86, the Nasdaq Composite slid 1.7% to 26,387.61, and the Dow Jones Industrial Average fell 0.2% to 51,480.79. The Nasdaq was also pressured by a weaker-than-expected Broadcom earnings report, which sent shares of peers like Micron, Intel, and AMD lower.
U.S. May Jobs Report Exceeds Expectations
The focus on Friday was the May nonfarm payrolls report. The U.S. Bureau of Labor Statistics reported 172,000 jobs added, far surpassing the forecast of 85,000, while the unemployment rate held at 4.3%. Payrolls for March and April were revised upward by a combined 93,000 jobs, confirming the resilience of the U.S. labor market.
Impact on Federal Reserve Policy
The strong jobs data have increased expectations for Federal Reserve interest rate hikes, even as analysts noted that moderate wage growth may temper dramatic policy shifts. Markets now price in at least one Fed rate increase by the end of 2026, according to the CME FedWatch Tool, reflecting the central bank’s dual mandate to control inflation and support maximum employment.
Middle East Tensions and Market Sentiment
Investor mood was dampened by Hezbollah’s rejection of a ceasefire between Israel and Lebanon. Tehran, aligned with Hezbollah, has made a Lebanon ceasefire a precondition for ongoing peace negotiations with the U.S. Israeli airstrikes killed at least four people, while Lebanese troops moved into contested areas in southern Lebanon, according to the Associated Press.
Oil Markets Respond to Geopolitical Risk
The stalemate between the U.S. and Iran has left the Strait of Hormuz effectively closed, threatening global oil supply. Brent crude futures fell 1.1% to $94.00 per barrel, and WTI crude dropped 1.6% to $91.52, though both are still on pace for weekly gains. Rising oil prices could drive global inflation, pushing central banks toward a hawkish policy stance.
Individual Stock Moves
Shares of DocuSign dropped more than 5% after its quarterly results disappointed investors awaiting its AI contracts platform ramp-up. Lululemon Athletica cut its full-year guidance due to waning North American demand, sending shares down over 7%. Conversely, Merlin Aerospace & Defense climbed after completing its C-130J autonomy program review, and ServiceTitan rose on stronger-than-expected Q1 revenue.
