A blowout May jobs report sent Treasury yields climbing and traders fully pricing a quarter-point rate hike by December, hammering growth stocks and pushing Bitcoin below $60,000 on Friday. The S&P 500 fell 1.69% to 7,455, while the Nasdaq dropped 2.82% as semiconductor stocks – the market's biggest engine this year – cratered.
Jobs data rattles rate-cut hopes
Payrolls rose 172,000 last month, more than double the roughly 80,000 economists expected. The unemployment rate held at 4.3%. The 10-year Treasury yield jumped to about 4.54%. Suddenly, the market sees a 0% chance of a rate cut at the June FOMC and a 3.6% chance of a cut at all this year. Instead, a quarter-point hike by December is fully priced in.
Broadcom miss triggers chip rout
Semiconductors had led May's rally, but Friday they lost that engine. Broadcom guided Q3 AI revenue to $16 billion – below the $17.2 billion analysts were looking for – and declined to raise its $100 billion AI target. The stock fell 15% on June 4 and another 6% over the next two sessions. Nvidia dropped about 4%, while AMD and Intel each fell around 8%. Oracle lost 8.45%, Micron 8.08%.
Rotation out of growth into defensives
The selloff was broad but not uniform. Breadth was sharply negative – decliners led 67.7% to 28.7% – but money rotated into defensive sectors: Consumer Defensive gained 1.88%, Healthcare 1.01%, Real Estate 0.74%, Utilities 0.20%. Basic Materials fell 4.36%, Technology 4.29%, Energy 1.65%, and Financials 0.53%. The Russell 2000 dropped 2.63% to 284.32, while the Dow fell 0.75% to 51,172.7.
Bitcoin under pressure as high-beta trades unwind
Robinhood dropped about 7% as higher yields and sliding Bitcoin weighed on the retail-focused exchange. Bitcoin itself slipped below $60,000, signaling that the rotation out of growth trades is hitting crypto too. One analyst note described the move as a “further rotation out of high-beta trades” as rate expectations reset. There's no major catalyst specific to crypto – just the macro wave pulling everything down together.
The next concrete test comes with the Fed’s June 17-18 meeting. With rate cuts off the table and a hike on the horizon, any rally in risk assets will need to prove it can survive a higher-for-longer rate environment.
