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Bearish -50

US stock markets this week: S&P 500's 9-week rally ends, falls 2.6%; Nasdaq tumbles 4.5% as tech stocks crash

AI-generated analysis

πŸ“‰ Wall Street's nine-week rally ended abruptly as technology stocks plummeted, triggering the Nasdaq's largest drop since April 2025.

πŸ“Š The S&P 500 fell 2.6% to close at 7,383.74, snapping its longest weekly winning streak since December 2023.

πŸ“‰ The Nasdaq Composite tumbled 4.5%, plunging 4.77% on Friday alone to close at 28,957.60.

🏦 A stronger-than-expected US jobs report with 172,000 nonfarm payrolls reignited fears that the Federal Reserve will keep interest rates elevated.

πŸ“ˆ Bond yields rose sharply, with the 10-year Treasury climbing above 4.5% and the 30-year yield exceeding 5%.

πŸ’» Semiconductor stocks were hit hardest, with Nvidia slumping 6.2% while Intel, Micron, AMD, and Broadcom dropped between 7.9% and 13.3%.

πŸ€– Broadcom's decline followed disappointment over its failure to raise its outlook for artificial intelligence chip demand.

🌍 Geopolitical tensions in the Middle East complicated peace efforts after Iran reaffirmed support for Hezbollah and demanded an Israeli withdrawal.

β›½ Rising oil prices due to the conflict raised fears that energy-driven inflation could spread across the broader economy.

πŸ”„ Investors largely viewed Friday's decline as a rotation away from richly valued technology stocks rather than a broader market panic.

πŸ—£οΈ US President Donald Trump criticized the market's reaction, arguing investors were placing too much emphasis on inflation concerns.

πŸ“‰ The Dow Jones Industrial Average posted a modest weekly loss of 1.35%, dropping 695.15 points to end at 50,866.78.

🧠 Market participants are now balancing strong economic data against rising bond yields and persistent inflation pressures.

Bullish Signals
  • The S&P 500's decline was viewed by many investors as a healthy rotation away from richly valued technology stocks rather than the beginning of a broader market panic.
  • Despite Friday's sharp decline, Wall Street faces a delicate balancing act between strong economic data and rising bond yields, suggesting underlying economic resilience.
  • US President Donald Trump criticized the market's reaction to the jobs report, arguing that investors were placing too much emphasis on inflation concerns, which could signal a shift in sentiment.
  • The article notes that fighting has eased following multiple ceasefire efforts by the Trump administration, leaving markets wary but not necessarily panicked about further disruptions.
  • Investors largely viewed the move as a profit-taking opportunity after a powerful multi-year rally, indicating strong prior performance rather than fundamental weakness.
Risk Factors
  • The Nasdaq Composite tumbled 4.5%, marking its largest drop since April 2025, as technology stocks led the market decline.
  • Semiconductor and AI-linked companies suffered significant losses, with Nvidia dropping 6.2% and Intel, Micron Technology, AMD, and Broadcom declining between 7.9% and 13.3%.
  • Broadcom's stock fell following a failure to raise its outlook for AI chip demand, indicating potential weakness in the sector's growth expectations.
  • A strong US jobs report showing nonfarm payrolls increased by 172,000 in May reignited fears that the Federal Reserve might delay interest rate cuts or maintain elevated rates longer.
  • Rising bond yields, with the 10-year US Treasury yield climbing above 4.5% and the 30-year yield surpassing 5%, raise concerns about higher borrowing costs impacting corporate earnings.
  • Geopolitical tensions in the Middle East, including Iran reaffirming support for Hezbollah, have complicated peace efforts and kept oil prices elevated, adding to inflation concerns.
  • Investors are reassessing valuations across the technology sector after a powerful multi-year rally, viewing the decline as a rotation away from richly valued stocks rather than a broader market panic.
Full Analysis
US stock markets ended a nine-week rally with significant declines, as the S&P 500 fell 2.6% and the Nasdaq Composite tumbled 4.5%, marking its largest drop since April 2025. The selloff was primarily driven by technology stocks, particularly semiconductors and artificial intelligence-linked companies, which had led the market higher in recent months. Nvidia dropped 6.2%, while Intel, Micron Technology, AMD, and Broadcom declined between 7.9% and 13.3%. Broadcom's decline followed a failure to raise its outlook for AI chip demand. The downturn was triggered by a strong US jobs report showing nonfarm payrolls increased by 172,000 in May, exceeding expectations of 80,000. This data reignited concerns that the Federal Reserve might delay interest rate cuts or maintain elevated rates longer to combat persistent inflation. Consequently, bond yields rose sharply, with the 10-year US Treasury yield climbing above 4.5% and the 30-year yield surpassing 5%, raising fears of higher borrowing costs impacting corporate earnings. Geopolitical tensions in the Middle East further complicated market sentiment, as hopes for a near-term resolution to the conflict faded after Iran reaffirmed support for Hezbollah. Rising oil prices due to these tensions added to inflation concerns, while investors viewed Friday's decline as a rotation away from richly valued technology stocks rather than a broader market panic. Despite US President Donald Trump criticizing the market's reaction, Wall Street faces a delicate balance between strong economic data, rising yields, and geopolitical uncertainty that could determine whether the rally resumes or faces a deeper correction.