Stocks Tumble on Tech Weakness and Fed Rate Hike Speculation

The S&P 500 Index ($SPX) (SPY) today is down -0.90%, the Dow Jones Industrial Average ($DOWI) (DIA) is down -0.32%, and the Nasdaq 100 Index ($IUXX) (QQQ) is down -1.85%.  June E-mini S&P futures (ESM26) are down -1.07%, and June E-mini Nasdaq futures (NQM26) are down -1.99%.

Stock indexes are under pressure today, with the Nasdaq 100 falling to a 1.5-week low as investors rotate out of AI-infrastructure and semiconductor stocks that earlier this week pushed the US stock index to all-time highs. Technology stocks continue to pull back amid long liquidation and profit-taking after Broadcom’s outlook for chip sales fell short of high expectations, raising concerns that the rally in the AI trade has been excessive.

Stock indexes added to their losses today as bond yields jumped on the stronger-than-expected US May payrolls report, bolstering speculation that the Fed’s next interest rate move will be a rate hike.  The 10-year T-note yield rose to a 2-week high of 4.54%.

US May nonfarm payrolls rose +172,000, stronger than expectations of +88,000.  Also, Apr nonfarm payrolls were revised upward to +179,000 from the previously reported +115,000.  The May unemployment rate remained unchanged at 4.3%, right on expectations.

US May average hourly earnings rose +0.3% m/m and +3.4% y/y, right on expectations.

Crude oil prices are slightly lower today even as the US and Iran have made little progress in talks over an interim peace deal, with clashes between Israel and Hezbollah militants continuing in Lebanon.  Iran insists on a ceasefire in Lebanon before accepting a US deal to extend the truce and reopen the Strait of Hormuz.  President Trump said Thursday that negotiations with Iran are in the “final” stages without elaborating, while Iran’s Foreign Minister Abbas Araghchi earlier said there had been “no tangible progress” even though both sides continue to exchange messages via mediators.

The markets are discounting a 3% chance of a +25 bp rate hike at the next FOMC meeting on June 16-17.

The generally favorable Q1 earnings season is winding down.  As of today, 83% of the 494 S&P 500 companies that reported Q1 earnings have beaten estimates.  Q1 S&P 500 earnings are projected to climb +12% y/y, according to Bloomberg Intelligence.  Stripping out the technology sector, Q1 earnings are projected to increase around +3%, the weakest in two years.

Overseas stock markets are lower today.  The Euro Stoxx 50 is down -0.17%.  China's Shanghai Composite fell to a 7-week low and closed down -0.74%.  Japan's Nikkei Stock Average closed down -1.31%.

Interest Rates

September 10-year T-notes (ZNU6) today are down -14 ticks, and the 10-year T-note yield is up +5.9 bp to 4.532%.  Sep T-note prices tumbled to a 2-week low today, and the 10-year T-note yield rose to a 2-week high of 4.540%.  T-notes retreated today on the stronger-than-expected increase in US May nonfarm payrolls and the sharp upside revision to April nonfarm payrolls, bolstering speculation that the next move by the Fed will be an interest rate increase.

European government bond yields are moving higher today.  The 10-year German Bund yield climbed to a 2-week high of 3.051% and is up +1.8 bp to 3.040%.  The 10-year UK gilt yield is up +1.0 bp to 4.908%.

Eurozone Q1 GDP was revised downward to -0.2% q/q and +0.3% y/y from the previously reported +0.1% q/q and +0.8% y/y.

Swaps are discounting a 98% chance of a +25 bp ECB rate hike at its next policy meeting on June 11.

US Stock Movers

Chipmakers and AI-infrastructure stocks are retreating for a second day today after Broadcom’s outlook for chip sales fell short of high expectations, raising concerns over whether the rally in the AI trade has been excessive.  ON Semiconductor (ON) is down more than -8% to lead losers in the S&P 500, and ARM Holdings Plc (ARM) is down more than -8% to lead losers in the Nasdaq 100.  Also, Marvell Technology (MRVL) is down more than -8%, and Western Digital (WDC) is down more than -7%.  In addition, Sandisk (SNDK), Lam Research (LRCX), Intel (INTC), Micron Technology (MU), and KLA Corp (KLAC) are down more than -5%.  Finally, Applied Materials (AMAT), Broadcom (AVGO), Advanced Micro Devices (AMD), Qualcomm (QCOM), ASML Holding NV (ASML), Seagate Technology Holdings Plc (STX), and NXP Semiconductors NV (NXPI) are down more than -4%. 

Cryptocurrency-exposed stocks are tumbling today, with Bitcoin (^BTCUSD) down more than -2% at a 3.75-month low.  Riot Platforms (RIOT) and Galaxy Digital Holdings (GLXY) are down more than -7%, and MARA Holdings (MARA) is down more than -6%. Also, Coinbase Global (COIN) and Strategy (MSTR) are down more than -4%.

Lululemon Athletica (LULU) is down more than -8% after cutting its 2027 net revenue forecast to $11 billion to $11.15 billion from a previous forecast of $11.35 billion to $11.50 billion, below the consensus of $11.49 billion.

DocuSign (DOCU) is down more than -7% after forecasting a full-year adjusted gross margin of 81.5% to 82%, the midpoint below the consensus of 81.8%.

Guidewire Software (GWRE) is down more than -6% after forecasting Q4 subscription and support revenue of $259 million to $265 million, the midpoint below the consensus of $263.6 million. 

Fiserv (FISV) is down more than -3% after BNP Paribas downgraded the stock to underperform from neutral with a price target of $46. 

ServiceTitan (TTAN) is up more than +7% after reporting Q1 revenue of $268.8 million, above the consensus of $256.7 million. 

G-III Apparel Group Ltd (GIII) is up more than +7% after boosting its 2027 adjusted EPS forecast to $2.15 to $2.25 from a previous estimate of $2.00 to $2.10, above the consensus of $2.09. 

Cooper Cos (COO) is up more than +6% to lead gainers in the S&P 500 after reporting Q2 net sales of $1.08 billion, better than the consensus of $1.05 billion. 

Argan (AGX) is up more than +5% after reporting Q1 revenue of $291 million, stronger than the consensus of $256 million. 

Chipotle Mexican Grill (CMG) is up more than +5% after JPMorgan Chase upgraded the stock to overweight from neutral with a price target of $35.   

Samsara (IOT) is up more than +4% after reporting Q1 revenue of $478.8 million, above the consensus of $455.2 million. 

Earnings Reports(6/5/2026)

ABM Industries Inc (ABM), G-III Apparel Group Ltd (GIII), Lifezone Metals Ltd (LZM).