Stocks Fall as Big Tech Declines and Strong Jobs Report Raises Fed Rate Hike Prospects

Wall Street slid as major tech stocks dropped sharply and robust May job growth heightened expectations that the Federal Reserve will raise interest rates later this year.

Editorial Team · Jun 5, 2026 · 2 min read · Source: wdio.com

Stocks dropped notably on Wall Street after a vigorous jobs report for May reinforced investor expectations that the Federal Reserve will increase interest rates in the near future. The S&P 500 declined by 1.6%, marking its biggest daily fall since March and setting the stage for its first weekly loss in over two months. The Dow Jones Industrial Average decreased by 373 points, or 0.7%, while the Nasdaq composite, heavily weighted with technology firms, plunged 2.6%.

Technology shares led the retreat, erasing gains made earlier this year as some of the market’s largest and most influential companies took hits. Nvidia shares fell 4.6%, and Broadcom dropped 5.9%. Although nearly half of S&P 500 stocks posted gains, the losses among high-value tech stocks exerted a disproportionate influence on overall market performance. This dynamic contributed to a broad pullback despite a relatively balanced daily ticker.

The strong employment report revealed that the U.S. economy added a surprising number of jobs, signaling continued labor market strength amid persistent inflation pressures. This data pushed Treasury yields higher, with the 10-year note yield rising to 4.54% and the 2-year note—more sensitive to Federal Reserve policy—increasing to 4.16%. These movements reflect growing investor conviction that the Fed will raise borrowing costs before the end of the year. Market pricing shows over a 60% probability of at least one rate hike, virtually ruling out any cuts during this period.

The Federal Reserve has kept rates steady recently as it monitors inflation trends, which have been exacerbated by geopolitical and economic factors. The ongoing conflict in the Middle East has disrupted crude oil supply routes, pushing Brent crude prices well above pre-war levels—from around $70 per barrel to about $93.50—despite a slight recent decline. The surge in oil prices has driven gasoline costs higher, adding inflationary pressure on goods and services transported across supply chains and raising concerns about potential drag on economic growth.