Shares fell sharply on Friday as a robust jobs report fueled speculation of a rate hike by the U.S. Federal Reserve, while investors grew cautious amid escalating Middle East tensions.
The Dow Jones Industrial Average fell 1%, the S&P 500 lost 2.4%, and the Nasdaq Composite dipped 4%, led by a selloff in technology shares, including AI chipmaker Nvidia. Broadcom shares were down nearly 7%, continuing losses since the semiconductor company reported underwhelming results on Wednesday.
Data showed U.S. employers added significantly more jobs than expected in May, strengthening the belief that the Fed could raise rates later this year. U.S. Treasury yields surged following the report, with the yield on the 2-year note hitting a 15-month high at 4.164%.
“We're talking about a strong economy. That just adds to inflation risk coming from the Gulf.”
Gary Schlossberg, market strategist at Wells Fargo Investment Institute
Iran's renewed support for Hezbollah and demands for Israel's withdrawal from southern Lebanon have complicated efforts to resolve broader U.S.-Iran tensions. This geopolitical uncertainty has added to market volatility.
Oil prices slipped after Oman confirmed normal operations at Mina al Fahal port, despite earlier reports of disruptions. Brent crude futures fell 2% to $93.09 a barrel, while U.S. crude dipped 2.69% to $90.54 per barrel, with both contracts set for their first weekly gains in three weeks.
“There are some near-term pressures on the short end of the curve and it's largely because of the geopolitical impact on the price of oil and headline inflation.”
Talley Leger, chief market strategist at the Wealth Consulting Group
In the currency markets, the yen settled around 160 per dollar, while the euro and sterling weakened against the dollar. Cryptocurrencies continued their decline, with bitcoin dropping 6.04% to $59,746.51 and ether falling 12.02% to $1,559.57.
Background
The U.S. stock market has been sensitive to economic data and geopolitical developments, with investors closely watching for signals on interest rate policy and global tensions. The Federal Reserve's decisions are crucial as they impact borrowing costs and economic growth.
As investors brace for potential rate hikes and geopolitical tensions, market participants will closely monitor economic indicators and global developments for further cues.
