Good Jobs Wiped $1.3 Trillion Off Chips

GOOD MORNING, The U.S. labor market delivered a blowout jobs report — and Wall Street's AI winners paid the price. May payrolls rose more than twice as much as expected, pushing rate-hike odds sharply higher and triggering the semiconductor sector's worst session since 2020. The selloff erased roughly $1.3 trillion from chip stocks in a single day. Away from AI, Lululemon cut its outlook again, showing that a resilient economy does not mean every consumer brand is participating.

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MARKETS | TLDR

• Nasdaq drops 4.2% after the jobs surprise: The Nasdaq fell 4.18%, the S&P 500 lost 2.64% and the Dow dropped 1.35% as investors sold high-valuation technology stocks.
• Chip stocks lose about $1.3 trillion: The PHLX Semiconductor Index plunged 10.3%, its worst session since March 2020, as Nvidia, Micron, AMD and Broadcom were hit by higher-rate fears.
• Fed hike odds jump after payrolls: Rate futures moved to roughly a 65% chance of a December hike, up from 48% before the report, after May payrolls rose 172,000 versus 85,000 expected.

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RATES

Good Jobs Wiped $1.3 Trillion Off Chips

The U.S. added 172,000 jobs in May, more than double the 85,000 economists expected, while the unemployment rate held at 4.3%. The data reassured investors that the economy remains resilient — then immediately forced them to reprice the Fed. December rate-hike odds jumped toward 65%-70%, and the most rate-sensitive part of the equity market sold off hard.

Semiconductors took the biggest hit. The PHLX Semiconductor Index fell 10.3%, its steepest one-day decline since March 2020, erasing roughly $1.3 trillion in market value. Nvidia fell 6.2%, while Intel, Micron, AMD and Broadcom dropped between roughly 8% and 13%. The Nasdaq fell 4.18%, ending what had been one of the strongest runs for AI-linked equities in years.

The fundamental AI story did not suddenly weaken. Strategists quoted by Reuters described much of the move as a positioning reset after chip stocks became extremely crowded and overbought. But that is exactly why the jobs report mattered: when valuations already assume strong growth, even good economic data can become bad news if it raises the discount rate. AI demand can stay intact while AI stocks still reprice.

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CONSUMER

The Economy Is Strong. Lululemon's Customer Isn’t.

Lululemon cut its annual profit forecast and issued second-quarter guidance below Wall Street expectations as the athletic-apparel company continued to struggle in its core U.S. market. Shares fell sharply after the results, extending a difficult stretch for a brand that once appeared almost immune to weakness in discretionary spending.

The contrast with the jobs report is the important part. U.S. payroll growth remains strong, but consumers are still making choices under persistent inflation and high financing costs. Premium apparel competes with housing, food, travel and other essentials for the same household budget. A healthy labor market therefore does not automatically translate into healthy demand for every discretionary category.

Lululemon also has company-specific problems. Product missteps, stronger competition and a leadership transition have weakened its brand momentum, while tariffs are adding pressure to gross margins. That means the stock is not a clean read on the consumer. But it is a useful reminder that macro resilience can coexist with very uneven spending underneath the headline numbers.

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HEADLINES

• SpaceX's $75 billion IPO is already twice oversubscribed: The company has drawn roughly $150 billion of investor orders a week before its expected debut, showing that appetite for mega-cap growth remains strong despite Friday's tech selloff.
• SpaceX won't get an instant S&P 500 pass: S&P Global kept its existing eligibility rules, meaning SpaceX will need at least 12 months of public trading, GAAP profitability and sufficient free float before it can join the index.
• Bitcoin gets caught in the rates unwind: Bitcoin fell about 4.1%, while Coinbase and Strategy dropped roughly 7%, showing that the higher-rate shock spread beyond equities into other long-duration risk assets.
• Iran keeps oil inflation risk alive: Brent remained above $95 as peace talks stalled and traffic through the Strait of Hormuz stayed limited, keeping an energy-driven inflation risk in the Fed's calculus.
• The Fed's Warsh era starts with a stronger labor market: The jobs report reduces concern about labor-market weakness just before Kevin Warsh's first FOMC meeting, allowing policymakers to focus more heavily on inflation.

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UPCOMING

• May CPI arrives June 10: Consumer inflation is the next major test of Friday's rate-hike repricing; another hot reading would reinforce the idea that the Fed may need to tighten rather than ease.
• Oracle reports June 10: Cloud infrastructure growth and AI bookings will show whether enterprise demand remains strong enough to offset pressure from higher discount rates.
• May PPI arrives June 11: Producer prices will reveal whether energy and supply-chain costs are feeding more broadly into inflation.
• SpaceX prices June 11 and begins trading June 12: The record $75 billion IPO will test whether investors still have enough liquidity and risk appetite to support another trillion-dollar technology valuation.

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DEEP INSIGTHS

Hot Jobs Report Sends Wall Street's Tech Favorites Sprawling

Reuters collects strategist reactions to Friday's selloff, which is useful for separating macro pressure from AI fundamentals. The common thread is that chips had become crowded and expensive; stronger jobs data supplied the catalyst for investors to reduce exposure, not evidence that infrastructure demand had collapsed.

SpaceX IPO Set to Test the High-Flying U.S. Stock Rally

This Reuters week-ahead piece frames the SpaceX offering as a liquidity event for the entire market. A $75 billion IPO at roughly a $1.75 trillion valuation can validate investor appetite for mega-cap growth — but it can also force institutions to reshuffle existing tech positions to fund the new allocation.