Wall Street ends sharply lower as chips stocks slide

Wall Street’s nine-week winning streak ended as hot tech stocks suffered their biggest daily decline since May 2025. This comes after May’s hot jobs report raised fears of a hawkish policy direction from the US Federal Reserve.

The selloff has been concentrated among chip stocks and other tech favorites, which have surged higher in recent weeks as the Nasdaq Composite Index and S&P 500 repeatedly rose to new highs.

All three major US stock market indices closed with sharp declines; The decline in chip stocks sent the tech-laden Nasdaq into its biggest one-day percentage loss since April 2025.

The Philadelphia SE Semiconductor Index experienced its largest one-day percentage decline since March 2020, wiping more than $US1 trillion ($A1.4 trillion) from its stock market value.

The S&P 500 ended a nine-week Friday-to-Friday winning streak, the longest weekly streak since the rally ended in December 2023.

“After the record run in stocks, particularly technology and semiconductors, over the last nine weeks, the floodgates broke today,” said Ryan Detrick, chief market strategist at Carson Group in Omaha.

“Frankly, the stronger-than-expected jobs report leaves the Fed on the hook for any interest rate cuts for the rest of the year. And the market is in crisis, hitting the big winners so far this year.”

Rising interest rates and the Iran war weighed on sentiment heading into the weekend, but many investors said they expected the rise in tech stocks to continue.

“The market reaction today was based on positioning rather than fundamentals,” said Ohsung Kwon, chief equity strategist at Wells Fargo.

“The semiconductor industry was hugely overbought. That’s why we’re seeing the sell-off. I don’t think this is the end of the semi-bull market.”

The U.S. economy added 172,000 jobs in May, more than double analysts’ expectations, while the unemployment rate remained steady at 4.3 percent, according to the Labor Department.

The robust report was double-edged: It provided reassurance about the economic health of the United States but all but destroyed hopes that the Fed would cut interest rates in the near future.

According to CME’s FedWatch tool, financial markets price the probability of the Fed’s rate hike at the end of its December meeting at 42.7 percent.

Fading hopes for a short-term solution to the Middle East war and reopening the Strait of Hormuz are raising fears that pressures on energy prices could translate into broader, systemic inflation.

Iran reaffirmed its support for Hezbollah and demanded that Israel withdraw its troops from Southern Lebanon; This has further complicated efforts to achieve a short-term peace agreement that would include resuming traffic in the critical strait.

US President Donald Trump’s administration has reached three ceasefire agreements, and while fighting has largely subsided, the two sides continue to exchange airstrikes.

Dow Jones Industrial Average decreased 695.15 points (1.35 percent) to 50,866.78 points, S&P 500 index decreased 200.57 points (2.64 percent) to 7,383.74 points and Nasdaq Composite decreased 1,121.53 points (4.18 percent) to 25,709.43 points. declined.

Among the 11 sectors of the S&P 500, technology lost value by 5.8 percent, while consumer staples were among those with a percentage increase.

Nvidia, the largest company by market value, lost 6.2 percent, while Intel, Micron, AMD and Broadcom lost between 7.9 percent and 13.3 percent.

Lululemon Athletica fell 8.6 percent after the athletic apparel maker cut its annual profit forecast and forecast second-quarter earnings well below Wall Street estimates.

Cooper Company rose 8.6 percent after the contact lens maker beat estimates for second-quarter results.

Cryptocurrency firms Coinbase and Strategy fell 7.1 percent and 6.9 percent respectively, driven by Bitcoin’s 4.1 percent decline.

S&P Global said it would not change eligibility requirements for its main indexes; That effectively prevents Elon Musk’s SpaceX from making a splash in the benchmark S&P 500 once it goes public in what would be the world’s largest initial public offering.

S&P Dow Jones Indices will report results after markets rebalance after close.

Chipmaker Marvell Technology, which has a valuation of more than $270 billion, is among the contenders to be added to the benchmark index.

Declining issues outnumbered advancers on the NYSE by a 3.14-to-1 ratio.

132 new highs and 249 new lows were recorded on the NYSE.

On Nasdaq, declining issues outnumbered leading stocks by a 3.48-to-1 ratio, with 1,074 stocks rising and 3,737 falling.

The S&P 500 posted 14 new 52-week highs and three new lows, while the Nasdaq Composite posted 83 new highs and 178 new lows.

Volume on U.S. exchanges was 22.89 billion shares, compared to the 20.29 billion average for all of the last 20 trading days.