Stronger May jobs report lifts yields, sparks chip selloff

U.S. stocks moved lower on Friday after May payrolls exceeded expectations, lifting Treasury yields and prompting heavy selling in semiconductor shares. The Nasdaq Composite fell 1.07%, the S&P 500 lost about 0.6%, and the Dow Jones Industrial Average rose roughly 20 points.

The Bureau of Labor Statistics reported nonfarm payrolls increased by 172,000 in May, up from 115,000 in April and well above forecasts near 80,000 to 85,000. The unemployment rate remained at 4.3%.

Money markets quickly repriced the outlook for Federal Reserve policy. Markets assigned about a 98% probability of a 25-basis-point rate increase by year-end, up from near 60% before the report. The benchmark 10-year Treasury yield moved above 4.5%, and the 30-year yield climbed past 5%.

Technology stocks, especially semiconductor companies, led losses as traders reduced exposure to rate-sensitive, high-growth names. Nvidia fell about 2%. Intel, AMD, Micron Technology and Broadcom dropped between roughly 3% and 5.5%. Marvell Technology declined more than 6%. Broadcom’s shares slipped around 3% after an earlier 12.5% drop on Thursday following weaker-than-expected revenue.

Semiconductor firms have been a major force behind the market’s recovery since March, supported by demand related to artificial intelligence and improving corporate earnings. The stronger jobs data led to portfolio adjustments across the sector.

Corporate earnings and guidance also affected share prices. Lululemon Athletica fell nearly 8.7% after cutting its full-year profit forecast and issuing second-quarter guidance below Wall Street estimates. Cooper Companies rose about 8% after reporting second-quarter results that beat analysts’ expectations.

Index-related developments drew attention. S&P Global confirmed it would not change eligibility rules for its major indexes, effectively ruling out immediate inclusion for SpaceX should the company go public. The latest index rebalancing this month put names such as Marvell in focus for potential additions.

Geopolitical reports indicated Hezbollah rejected a new ceasefire proposal for Lebanon while Israel planned to keep troops in place, a development that added to investor caution. Citi reduced some equity exposure after the recent rally, citing higher inflation risks and crowded positioning, while maintaining a constructive longer-term outlook tied to AI-driven earnings growth.

If current trading patterns persist through the session, the S&P 500 would record its first weekly loss since April and the Nasdaq would finish the week lower, while the Dow remained on track for a third consecutive weekly gain.