U.S. Stocks Fall as Jobs Report Fuels Fed Rate-Hike Bets, S&P 500 and Nasdaq Slide

US stocks fell in early Friday trading after a stronger-than-expected May jobs report revived concerns that the Federal Reserve could keep interest rates elevated, or even deliver a hike later this year. The Dow Jones Industrial Average was little changed, while the S&P 500 fell about 0.7% and the Nasdaq Composite dropped roughly 1.2%, with technology shares leading the decline. Treasury yields rose after the report, reflecting a more hawkish outlook for policy and inflation.

The Labor Department said the US economy added 172,000 jobs in May, well above economists’ expectations of around 88,000. The unemployment rate held steady at 4.3% for a third straight month. Wage growth eased slightly, with average hourly earnings rising 3.4% year over year, down from 3.6% in the prior reading. April payrolls were also revised higher, reinforcing the view that the labor market remains resilient despite signs of moderation elsewhere in the economy.

The jobs data shifted market expectations sharply. Traders increasingly priced in at least one quarter-point Federal Reserve rate hike by the end of the year, with odds rising for a move as soon as the autumn meeting. The report added to pressure on bond markets, with the 10-year Treasury yield, the 30-year yield, and the five-year note all moving higher after the release.

Technology stocks extended weakness after Broadcom’s latest earnings and guidance raised concerns about the durability of the artificial intelligence trade. Chipmakers broadly sold off, adding to the drag on the Nasdaq and other growth-oriented names. The pullback threatened to interrupt the S&P 500’s attempt to secure a 10th straight weekly gain, which would mark its longest winning streak since 1985.

Investors were also watching geopolitical developments. Oil prices eased after recent gains as US-Iran negotiations appeared to stall, even as President Trump said talks were in their final stages. The fragile ceasefire environment in the Middle East continued to add uncertainty to broader risk sentiment.

Among individual movers, Lululemon tumbled more than 10% in premarket trading after the company cut its second-quarter and full-year outlooks. The athletic apparel retailer cited headwinds and lower-than-expected earnings guidance, disappointing investors and adding to concerns about consumer demand and margins.

In a separate market development, S&P Dow Jones Indices said it would not change its rules to speed the inclusion of mega-cap IPOs like SpaceX into major benchmarks such as the S&P 500. The index provider kept its existing requirements, including the 12-month seasoning period and profitability and float standards.

Overall, Friday’s session reflected a market balancing strong labor data against higher-rate fears, pressure on tech, and renewed geopolitical uncertainty.