Strong US Jobs Data Sparks Market Rout; S&P 500 Loses $1.8 Trillion, Chip Index Plunges 10%

U.S. stocks tumbled on Friday, June 5, 2026, after a much stronger-than-expected May employment report crushed hopes for imminent Federal Reserve rate cuts and triggered a violent sell-off in overextended AI shares. The S&P 500 slumped 2.64%, wiping out about $1.8 trillion in market value, while the Philadelphia Semiconductor Index plunged over 10%—its worst day since March 2020—as profit-taking swept through chip stocks. The Nasdaq Composite tumbled 4.18%, its largest single-day point decline on record, and the Dow Jones Industrial Average fell 695 points. Robust payrolls data fueled fears the Fed would keep rates elevated, or even hike again. President Trump expressed confusion on Truth Social, arguing that strong growth should lift stocks. Interactive Brokers economist Jose Torres noted the combination of rising bond yields and falling oil prices signals worry over a more hawkish central bank. Beyond macro jitters, the AI-fueled rally reversed sharply. Broadcom’s disappointing forecast punctured the belief that all AI-linked firms are bulletproof. Adding to anxiety, reports that Meta Platforms is considering issuing billions of dollars in new shares for AI infrastructure, following Alphabet’s $85 billion fundraising plan, raised the specter of dilutive capital raising across big tech. Defensive names bucked the trend, with Coca-Cola gaining 3.46%.