Nasdaq Plummets Over 4% as Fed Rate Hike Looms
By John Nada·Jun 7, 2026·2 min read
Nasdaq sinks 4% as jobs data stokes Fed rate hike fears. Nvidia and tech stocks lead downturn.
The Nasdaq Composite (^IXIC) plunged more than 4.1% Friday, leading a sharp downturn in US stock markets. This came on the heels of a robust May jobs report that rattled traders betting on Federal Reserve policies, as reported by Yahoo Finance.
Markets were jolted when US employers added 172,000 jobs, far exceeding expectations. This unexpected strength in the labor market has fueled speculation that the Fed might raise interest rates before the year's end. As a result, tech stocks, particularly semiconductor companies like Nvidia (NVDA), AMD (AMD), and Intel (INTC), have taken a beating.
Nvidia, a major player in the AI chip market, saw its shares tumble by 6%, bringing its market capitalization below the $5 trillion mark, according to Yahoo Finance data. It's not just an issue of numbers; the dip erases a staggering $300 billion in market value, part of a broader trend in which chip stocks have lost approximately $1 trillion.
The S&P 500 (^GSPC) wasn't spared either, ending its nine-week winning streak with a 2.5% weekly decline. Such a streak hadn't been seen since 1985. The Dow Jones Industrial Average (^DJI) lost 1.3%, further illustrating the market-wide impact.
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Traders are now fully pricing in a quarter-point rate hike by December’s Federal Reserve meeting, based on Bloomberg data. This shift comes amid persistent inflationary pressures exacerbated by energy price fluctuations due to geopolitical tensions with Iran.
Bitcoin hasn't been immune to the market's slide. The cryptocurrency fell more than 2% to $61,000, dipping below its 200-day moving average—a critical technical indicator often viewed by traders.
Despite these headwinds, President Trump continues to advocate for rate cuts, even as his appointee, Kevin Warsh, steps in as the new Fed chair. It's an intriguing backdrop where economic metrics, policy shifts, and market sentiment all intersect, challenging investors to reassess their strategies.
As the dust settles, one key question lingers: will the labor market's resilience force an interest rate hike, or is the downturn in tech stocks merely a temporary retreat?