Stocks, bonds fall as strong US jobs data fuels rate hike bets

Key facts

• US stocks and bonds fell sharply on Friday.
• The US economy added 172,000 jobs in May, exceeding expectations.
• The strong jobs report increased bets on a Federal Reserve rate hike in December.
• Technology and chip stocks experienced significant declines.
• The 10-year Treasury yield rose above 4.5%.

US stocks and bonds declined sharply on Friday, with the Nasdaq falling 2.1%, the S&P 500 dropping 1.1%, and the Dow Jones Industrial Average losing around 140 points, or 0.3%. The sell-off was driven by a stronger-than-expected May jobs report, which showed 172,000 jobs added, nearly double the 88,000 forecast, and the unemployment rate holding steady at 4.3%. This robust data pushed the odds of a Federal Reserve rate hike by year-end to 68.3%, effectively ruling out near-term cuts. Additionally, Broadcom's earnings sell-off dragged chip stocks and the broader AI trade lower, with the semiconductor index dropping 8.8%. The S&P 500 is now at risk of snapping its nine-week winning streak. In Canada, employment rose by 87,800 jobs, and the unemployment rate fell to 6.6%.