Wall Street panics after stock market crash despite robust May jobs report

Wall Street experienced a significant sell-off on Friday afternoon, with American stock markets plummeting, particularly technology companies. The Nasdaq Composite saw its steepest decline in nearly four years, falling 4.7%, while the S&P 500 lost 2.6% and the Dow Jones Industrial Average dropped 1.3%.

The sharp downturn was triggered by a robust May jobs report, which exceeded investor expectations. This data intensified concerns that the Federal Reserve might be compelled to increase interest rates earlier than anticipated, diminishing hopes for upcoming rate cuts. "Any hope for an interest rate cut has been practically eliminated by the very strong jobs report," wrote Ronald Temple, chief strategist at Lazard.

Technology stocks, which had previously driven the market to historic highs, bore the brunt of the sell-off. Nvidia shares fell 5.5%, Broadcom dropped nearly 7%, and Micron Technology plunged over 11%. Despite a relatively even split between advancing and declining stocks within the S&P 500, the substantial weighting of high-valuation tech giants amplified the negative impact on the broader market.

Indicating heightened investor anxiety, the "fear index" surged by over 34% to reach 21 in the final trading hours, marking its largest daily increase in two years. The price of Brent crude oil also fell 2.2% to $92.97 per barrel. Meanwhile, an inflation indicator favored by the Federal Reserve showed prices rose 3.8% in April, the largest increase in two years. Analysts caution that the high valuations of AI-exposed tech companies may become increasingly difficult to justify.

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Any hope for an interest rate cut has been practically eliminated by the very strong jobs report.