The Nasdaq Composite plunged 4.18% on June 5, 2026, its worst session since April 2025, as a Blowout May jobs report drove rate hike odds above 70% and triggered a $1 trillion semiconductor selloff.

Key Highlights

  • Nasdaq Composite fell 4.18% on June 5, 2026, its steepest single-session loss since April 2025.
  • May nonfarm payrolls rose 172,000, more than double the 80,000 consensus estimate.
  • Federal Reserve rate hike probability for December 2026 surged from 50% to above 70%.
  • Philadelphia Semiconductor index posted its worst daily decline since March 2020.
  • The S&P 500 ended a nine-consecutive-week run of Friday-to-Friday gains.

Nine Weeks of Gains, Undone in One Session

The Nasdaq Composite closed at 25,709.43 on June 5, 2026, down 4.18% for its most severe single-day loss in over a year. The S&P 500 shed 2.64% to finish at 7,383.74, ending its longest weekly winning streak since late 2023. The Dow Jones Industrial Average fell 695 points to 50,866.78.

Damage was concentrated in technology, which tumbled 5.8% across S&P 500 sectors while consumer staples and healthcare advanced. More than half of S&P 500 constituents closed higher, confirming a targeted exit from momentum names rather than broad-based risk aversion.

The Jobs Report That Changed the Rate Outlook

At the centre of Friday's Volatility was a May employment report that landed well outside consensus expectations. The Bureau of Labor Statistics recorded 172,000 nonfarm Payroll additions against an economist forecast of 80,000, with the Unemployment rate holding at 4.3%.

The reading closed the door on any near-term Federal Reserve rate cut. CME FedWatch data showed the probability of a rate hike by December 2026 jumping from approximately 50% to above 70%. The 10-year Treasury Yield crossed 4.5% and the 30-year breached 5%, levels that compress the present value of long-dated corporate Earnings and apply sharpest pressure to high-growth technology valuations. A portion of the payroll surge reflected pre-tournament hiring for the FIFA World Cup, opening June 11 across 16 United States cities.

Semiconductors at the Centre of the Storm

The Philadelphia Semiconductor Index suffered its largest single-day decline since March 2020, erasing over $1 trillion in Market Value. The slide extended from Thursday, when Broadcom (NASDAQ:AVGO) delivered a more measured AI chip Demand outlook than anticipated, losing over 12% before shedding a further 7.9% on Friday. Nvidia (NASDAQ:NVDA) lost 6.2%. Marvell Technology (NASDAQ:MRVL) fell more than 16%. Advanced Micro Devices (NASDAQ:AMD) and Intel (NASDAQ:INTC) each lost approximately 11%. Micron Technology (NASDAQ:MU) dropped 13%, extending Thursday's 8% decline. The iShares Semiconductor ETF nonetheless remains approximately 79% higher year to date.

Defensive Rotation and the SpaceX Variable

Investors rotated into defensive names. Procter and Gamble (NYSE:PG), Colgate-Palmolive (NYSE:CL), and Coca-Cola (NYSE:KO) posted gains of 3% to 5%. Healthcare advanced, led by Cooper Companies (NYSE:COO), up 8.6% on a quarterly earnings beat. Bitcoin fell below $60,000 for the first time since October 2024, pulling Strategy (NASDAQ:MSTR) and Coinbase (NASDAQ:COIN) sharply lower.

The approaching SpaceX Nasdaq debut, expected at a $1.77 trillion valuation and set to be the largest IPO on record, added a mechanical dimension to the technology selling. Prospective participants were broadly expected to fund allocations by trimming AI and momentum holdings. S&P Dow Jones Indices confirmed eligibility rules unchanged, requiring SpaceX to trade for at least 12 months before qualifying for S&P 500 inclusion.

The structural Investment case for AI infrastructure remains intact. What the session repriced was the near-term Cost of Capital and the premium attached to a sector that had risen almost without interruption for nine weeks.