The US stock market experienced a broad decline on Friday after a stronger-than-expected May jobs report lifted Treasury yields and led traders to fully price a Fed rate hike this year. The S&P 500 fell 1.69% to 7,457, the Nasdaq Composite dropped 2.82%, while the Dow Jones Industrial Average declined 0.75%. The 10-year Treasury yield jumped to about 4.54% after payrolls rose 172,000, more than double expectations. This 'good news is bad news' reaction reflects that a strong labor market removes the case for rate cuts, lowering the value of future earnings that tech valuations depend on. Tech stocks were hit hardest, with Broadcom falling about 15% after its AI revenue guidance missed expectations, dragging down Nvidia, AMD, and Intel. Semiconductors, which led May’s rally, became the biggest drag as investors rotated out of growth stocks into defensive sectors like consumer staples, healthcare, and real estate. The rotation was driven by rising yields resetting valuations, making growth stocks less attractive as their distant earnings are discounted at higher rates. Market breadth was negative, with decliners outpacing advancers 67.7% to 28.7%. The S&P 500 pullback resembles a bullish flag pattern, needing to reclaim 7,628 to resume the breakout. Sectors such as consumer defensive, healthcare, and real estate held up well, while basic materials, technology, and energy fell. Investors are now focused on the Fed's next moves and the 10-year yield level, with Bitcoin's decline under $60,000 adding pressure on risk assets.

Key facts

• May payrolls rose 172,000, double expectations, pushing 10-year yield above 4.54%.
• Broadcom fell ~15% on AI revenue guidance miss, dragging semiconductor stocks down.
• S&P 500 dropped 1.69%; Nasdaq fell 2.82%, while Dow lost only 0.75%.
• Rotation from growth to defensive sectors: consumer staples and healthcare gained.
• Market breadth negative (67.7% decliners) as tech and materials sectors plunged.

KeyAudit data perspective