Nasdaq falls 4.2% after 272K jobs blow past consensus, pushing 10-year yield to 4.43%. CPI and Fed dot plot next week will decide if the selloff deepens.
The first trading week of June ended with the most aggressive single-week selloff since the regional banking turmoil in March 2023. The Nasdaq fell 4.2%. The Russell 2000 dropped 3.5%. The S&P 500 lost 2.2%.
The trigger was the May jobs report. The Labor Department reported 272,000 nonfarm payrolls added last month. That blew past the 185,000 consensus estimate. The 10-year Treasury yield jumped 14 basis points to 4.43%, its highest level in over a month. The market read the print as a signal that the Federal Reserve will hold rates higher for longer. That compressed equity valuations across the board.
The selloff concentrated in long-duration assets – stocks whose value depends on cash flows far in the future. When yields rise, the present value of those distant earnings shrinks. That explains why the Nasdaq fell more than the S&P 500. The Russell 2000, packed with unprofitable small caps that need cheap financing, got hit hardest.
NVIDIA (NVDA) lost 5.1% on Friday alone. Apple (AAPL) dropped 3.8%. Both are classic rate-sensitive growth names. The Bloomberg Magnificent 7 Index fell 4.8% for the week, its worst performance since October 2023.
The headline payrolls number was strong. The household survey, which counts employment differently, showed a 408,000 drop in employed workers. The unemployment rate ticked up to 4.0% from 3.9%. Average hourly earnings rose 0.4% month over month, above the 0.3% estimate, adding to inflation concerns.
Federal Reserve Chair Jerome Powell has said the central bank needs "greater confidence" that inflation is moving sustainably toward 2% before cutting rates. The jobs data gave him no reason to accelerate that timeline. CME FedWatch now shows a 50% probability of a rate cut by September. That is down from 60% before the report.
Traders rotated into defensive sectors on Friday. Utilities gained 1.2%. Consumer staples rose 0.8%. Real estate fell only 0.3%, outperforming the broader market. Energy dropped 2.1% as crude oil fell 3.5% to $75.53 per barrel, pressured by the stronger dollar and demand concerns.
Gold fell 3.4% to $2,325 per ounce, its biggest one-day drop in over two years. The dollar index rose 0.8%, its largest single-day gain since February. Higher yields make non-yielding assets like gold less attractive.
The June 12 CPI print is the next major data point. If inflation comes in hot again, the September cut probability could fall below 30%. If it softens, the market may recover some of last week's losses. The Fed's June meeting concludes on June 12, with a new dot plot and economic projections. The last dot plot in March showed three cuts in 2024. That number is almost certain to shrink.
The May jobs report broke the calm that had held since April. The market had been pricing in a soft landing with rate cuts starting in September. That narrative is now in doubt. The next two weeks – with CPI, the Fed meeting, and quad witching on June 21 – will determine whether this is a correction or the start of a deeper drawdown.
Positioning: Short-duration plays like utilities and healthcare may hold up better than tech and small caps until the inflation picture clears. Cash is not a bad position here. The 2-year yield at 4.87% offers a decent return with no duration risk.
Prepared with AlphaScala research tooling and grounded in primary market data: live prices, fundamentals, SEC filings, hedge-fund holdings, and insider activity. Each story is checked against AlphaScala publishing rules before release. Educational coverage, not personalized advice.