Tech Sell-off, Rate Hike Fears

Wall Street experienced its worst day since October, with major indices like the Nasdaq Composite and S&P 500 seeing significant declines. This downturn was primarily driven by a sell-off in technology and semiconductor stocks, including Nvidia and Broadcom, which had previously powered the market to record highs. The catalyst for this market reaction was a stronger-than-expected jobs report from the United States — United States Department of Labor, which added 172,000 jobs in May. This robust employment data diminished expectations for the United States — Federal Reserve to cut interest rates, with some analysts now pricing in a likelihood of a rate hike by year-end. Additionally, the ongoing Iran war continued to weigh on market sentiment, with elevated oil prices due to the effective closure of the Strait of Hormuz contributing to inflation fears. Efforts to secure a peace deal in the Middle East were complicated by Hezbollah's rejection of a ceasefire agreement between Israel and Lebanon. Companies like Lululemon also contributed to the negative sentiment with trimmed profit forecasts, while The Cooper Companies provided a rare positive note by beating earnings estimates. The Philadelphia Semiconductor Index suffered its largest one-day percentage plunge since March 2020, erasing over $1 trillion in market value.