US stock markets experienced a violent sell-off on Friday, with the NASDAQ recording its biggest drop since April 2025, the S&P 500 falling 2.64%, and the Dow Jones Industrial Average losing nearly 700 points. According to reports from The Financial Express, the crash wiped out nearly $2 trillion in market value as investors reacted to stronger-than-expected jobs data and geopolitical tensions. The sell-off was particularly severe in technology stocks, with AI-heavy companies losing approximately $1.3 trillion in market value. Data indicates that AI heavy hitters lost about $1.3 trillion in market value as the semiconductor sector bore the brunt of the sell-off.
The semiconductor sector bore the brunt of the sell-off, with the PHLX chip index slumping 10.3% in its deepest one-day loss since March 2020. As reported by The Financial Express, NVIDIA fell about 6% on Friday, with the world's most valuable chipmaker losing more than $300 billion from its market capitalisation. Broadcom also fell nearly 8% amid a loss-making streak since reporting underwhelming results on Wednesday. The selling reached new intensity levels, with some tech-heavy indexes and funds reporting their worst losses since the COVID-19 pandemic. Reports suggest that the group may have lost ground on Thursday amid disappointment over Broadcom's failure to raise its AI chip outlook, but the selling on Friday reached a new level of intensity.
The market crash was triggered by a blowout jobs report that fueled bets of a rate hike by the US Federal Reserve. According to The Financial Express, data showed that American employers added far more jobs than expected in May, bolstering expectations that the Fed could raise rates late this year. US Treasury yields also surged following the report, with the yield on the 2-year note hitting a 15-month high. Market strategist Gary Schlossberg from Wells Fargo Investment Institute noted that the strong economy adds to inflation risk and makes it difficult for the Fed to consider rate cuts, potentially increasing chances of a rate hike before the end of the year. Markets are currently pricing about a 72% chance of a Fed rate hike in December compared to about 50% before the jobs data, despite gold's traditional role as an inflation hedge.
Fresh developments on the Iran war front added to investor wariness as Tehran reaffirmed support for the Hezbollah militia and demanded Israel withdraw from southern Lebanon. As reported by The Financial Express, Israel has said it would not withdraw troops from Lebanon, further complicating efforts to end the broader conflict between the US and Iran. These geopolitical tensions compounded the market's reaction to the economic data and contributed to the defensive investor positioning ahead of the weekend. Fresh developments also added to investor concerns as Oil prices slipped on Friday after Oman said operations at Mina al Fahal port were proceeding normally. Brent crude futures fell 2% to settle at $93.09 a barrel and US crude dipped 2.69% to $90.54 per barrel.
The jobs data reinforced expectations that the Federal Reserve will keep interest rates higher for longer, affecting precious metals markets. According to The Financial Express, gold fell about 3% on Friday to $4,341.52 per ounce, with spot silver dropping 6.8% to $68.86 per ounce. Platinum fell 5.9% to $1,788.49 and palladium slid 5.9% to $1,242.50. All three metals were headed for weekly losses, with bullion down about 4.3% this week. Markets are currently pricing about a 72% chance of a Fed rate hike in December compared to about 50% before the jobs data, despite gold's traditional role as an inflation hedge. Higher rates tend to weigh on precious metals, as the metal loses its appeal as a store of value when interest rates rise.
