U.S. employers added 172,000 jobs in May, far exceeding the roughly 88,000 economists had anticipated, sending shockwaves through financial markets.
The unemployment rate held steady at 4.3%, offering little comfort to investors who were already on edge about the trajectory of Federal Reserve policy.
Markets responded swiftly and sharply, with growth and technology stocks bearing the heaviest losses as traders reassessed the timeline for potential rate cuts.
The Nasdaq 100 plunged nearly 5%, marking its worst single-day loss since October of last year and its worst weekly performance since Liberation Day.
Nvidia (NVDA) dropped 5% and Broadcom (AVGO) fell 5.5%, while Micron Technology (MU) and AMD (AMD) each shed more than 9% on the session.
Those four companies alone erased more than $500 billion in combined market capitalization by midday, underscoring the severity of the selloff.
“Any hopes of a Fed rate cut have effectively been eliminated with this morning’s strong jobs report,” said Ron Temple, chief market strategist at Lazard.
Temple added, “While I still view a rate hike as unlikely, the case for easing has been invalidated with headline CPI inflation next week likely to top 4%.”
The Fed has held its benchmark funds rate at 3.75% on the upper bound since its December 2025 cut, with each strong data point pushing the next easing further out on the calendar.
Analysts at Edward Jones noted that the bar for rate hikes remains high, requiring signs of a “more persistent spike in inflation” before the Fed would consider moving toward a tightening cycle.
Edward Jones also warned that new Fed Chair Kevin Warsh will face a “challenging balancing act at his first meeting given the complicated balancing act facing Fed policy at present and well-documented divisions on the FOMC rate-setting committee.”
Warsh takes center stage at the June 17 FOMC meeting, his first press conference as Fed Chair, against a backdrop of conflicting economic signals and intense market scrutiny.
The central debate among economists and market strategists is whether one strong monthly jobs print is enough to fundamentally shift the Fed’s cautious, data-dependent posture.
The prevailing view among more measured analysts holds that a single robust report does not compel the central bank to abandon its wait-and-see approach or pivot toward tightening.
Investors will be watching next week’s Consumer Price Index report closely, with inflation data expected to carry significant weight in shaping the Fed’s decision-making heading into the summer.
