US stock markets fell sharply on Friday afternoon as tech stocks posted steep losses, fueled by a stronger-than-expected jobs report. The data heightened fears that the Federal Reserve may have to raise interest rates sooner than investors anticipated.
American stock markets fell sharply on Friday afternoon/PHOTO: EPA/EFE
The S&P 500 lost 2.6%, its biggest one-day drop in months and ending its first week of decline in 10. The Nasdaq Composite was hit the hardest, falling 4.7 percent — its steepest decline in nearly four years. The Dow Jones Industrial Average fell 1.3%.
The technology sector dragged the market lower, as stocks that had fueled recent all-time highs suffered steep corrections: Nvidia lost 5.5%, Broadcom nearly 7% and Micron Technology fell more than 11%.
Within the S&P 500, stocks were relatively balanced between winners and losers, but the heavy weighting of large tech companies — with high valuations — magnified the negative impact on the overall market.
The Federal Reserve has kept interest rates unchanged in recent months as it tries to gauge inflation. However, investors were still hoping for an eventual rate cut — hope that diminished considerably after the release of labor market data.
“Any hope for a rate cut has been virtually eliminated by the very strong jobs report,” Ronald Temple, chief strategist at Lazard, wrote in a note to investors.
The so-called “fear index” has increased by more than 34%
In a sign of the tension on Wall Street, the so-called “fear index” surged more than 34 percent to 21 in the final trading hours — the biggest daily gain in two years.
Brent crude fell 2.2 percent to $92.97 a barrel, after hovering around $70 before the Iran conflict. Rising oil prices have fueled higher fuel prices, contributing to broader inflationary pressures, including on transported goods.
A preferred gauge of inflation by the Federal Reserve shows that prices rose 3.8 percent in April, the biggest increase in two years.
Markets have recently been betting on the idea of a de-escalation of the conflict in Iran, but negotiations remain uncertain, despite a preliminary agreement to extend the ceasefire.
Financial reporting season is coming to an end. Lululemon lost 7.9% after it cut its revenue and profit estimates. Overall, however, most companies reported better-than-expected results, supporting the markets' recent rally.
However, analysts warn that the high valuations of technology companies exposed to the theme of artificial intelligence could become difficult to justify.
Bitcoin drops below $60,000, lowest level since October 2024
Bitcoin continued to fall on Friday, hitting multi-month lows and marking a strongly negative week for investors.
The cryptocurrency fell 3.4% to $61,514.90, after previously hitting $59,099.25 — its lowest level since October 2024. For the week, losses reached 16%.
The decline began after Strategy, the company founded by Michael Saylor, sold a small portion of its bitcoin holdings, fueling jitters in the market and triggering hundreds of millions of dollars worth of liquidations. The pressure was amplified by the rise in US bond yields amid the positive labor market report.
Strategy shares partially recouped losses but ended the day down 6.9% and the week down 24%, its worst performance since November 2022.
At $60,000, bitcoin remains more than 50% below its all-time high of around $126,000 reached in October 2025.
Analysts put the recent pressure on a combination of factors: Strategy sales and a realignment of speculative capital to other assets, particularly stocks in the artificial intelligence and semiconductor sectors.
In parallel, a possible legislative catalyst — the so-called “Clarity Act” — is losing traction amid political divisions, dampening optimism in the crypto market.
The correlation between bitcoin and the stock markets has changed significantly in recent weeks, after previously moving almost in sync.
Bitcoin ETFs saw net inflows of $3 million on Thursday, snapping a record 13-day streak of outflows. However, total assets fell to $80.4 billion from $107.8 billion in mid-May.
But some investors see the correction as an opportunity. Strive chief executive Matt Cole said bitcoin's fundamentals have “never been stronger,” seeing current levels as a possible rally zone.
Elsewhere in the crypto market, Zcash fell sharply after an AI-assisted security audit identified an old vulnerability that could have allowed the creation of fake coins.
