Why stocks are cratering after a blowout jobs report

The US added 172,000 jobs in May, well above the 88,000 economists had expected, while the unemployment rate held at 4.3%. Investors sold high-flying growth and AI stocks; the Nasdaq 100 plunged 4% to 25,756.77, the S&P 500 fell 2.42% to 7,400.71 ending a nine-week winning streak, and the Dow slipped 1.15% to 50,970.39 (down 519.54 points).

The stronger-than-expected payrolls print reduced hopes for Federal Reserve rate cuts because rising inflation and a tight labor market limit the Fed's room to ease. Inflation accelerated to its hottest pace in about three years in April, helped by higher energy prices, and markets had already pared back easing expectations after the start of the US-Iran war.

The CME FedWatch tool showed the odds of a year-end rate cut at 1.1% and the chance of a hike at 70.7%; the 10-year Treasury yield rose to 4.53%, breaking above 4.5%, while 20- and 30-year yields also ticked higher above 5%. Market strategists said the report mattered for policy.

United States

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