Stocks slide as strong jobs report lifts yields and hits chip shares

U.S. nonfarm payrolls rose by a seasonally adjusted 172,000 in May, the Labor Department reported Friday, far exceeding the 80,000 increase economists polled by Dow Jones had expected. The figure was down only slightly from an upwardly revised 179,000 in April, and the unemployment rate held steady at 4.3%, painting a picture of a labor market that has cooled but not cracked.

Average hourly earnings climbed 0.3% on the month and 3.4% from a year earlier, both in line with forecasts, leaving wage growth firm enough to keep the Federal Reserve cautious. The strength of the report reinforced the central bank's wait-and-see posture and prompted traders to scale back bets on near-term policy easing.

Bond yields jumped in response. The benchmark 10-year Treasury yield rose five basis points to 4.534%, its highest since May 21, while the two-year yield, which tracks Fed expectations most closely, climbed nine basis points to 4.153%, the highest since February 2025. The 30-year bond yield advanced to 5.021%.

Equities sold off as borrowing costs rose. The S&P 500 fell roughly 1%, sliding about 46 points to around 7,538, while the Nasdaq Composite dropped more sharply under the weight of a renewed retreat in semiconductor shares. Higher yields tend to pressure the richly valued technology names that have driven much of the market's 2026 advance.

Chip stocks bore the brunt of the decline. Broadcom slipped about 3% a day after tumbling more than 12% on disappointing guidance, while Marvell Technology fell more than 8% and Micron Technology dropped around 6%. The cluster of losses extended a bruising stretch for an industry that has been at the heart of the artificial-intelligence trade.

With the labor market proving resilient and inflation still above target, futures markets shifted to price in at least one Federal Reserve rate increase by the end of 2026, according to the CME FedWatch tool. Investors now turn to upcoming inflation data and Fed commentary for clearer signals on the path of policy through the second half of the year.