US equities fall as Broadcom earnings and strong jobs data stoke rate-hike fears
The S&P 500’s nine-week winning streak ended as tech stocks retreated, while robust May payroll figures and Middle East conflict fuel expectations of further Federal Reserve tightening.
US and global equity markets declined on Monday, marking the end of the S&P 500’s nine-week winning streak following a sharp sell-off in the semiconductor sector. The downturn was driven by disappointing earnings from Broadcom, which saw its shares drop 20% over two days, and a 10% plunge in the SOX semiconductor index on Friday. The broader Nasdaq fell approximately 4% heading into the weekend, with tech-heavy Asian bourses nosediving and Europe’s STOXX 600 sliding to a two-week low on Monday.
The market retreat was exacerbated by robust US May payroll figures, which added 172,000 jobs, more than double the forecast. The economy also added 93,000 more jobs in March and April than previously estimated, while the unemployment rate held steady at 4.3% for a third month. Employment gains averaged 188,000 jobs per month over the past three months, nearly triple the comparable figure for the same period in 2025.
These strong labour data points have increased expectations for Federal Reserve interest rate hikes. Markets now price in an almost 80% chance of a rate hike by year-end and almost two hikes within 12 months. Treasury yields are rising as investors react to the data, which suggests the economy is running hotter than anticipated.
Geopolitical tensions further complicated the outlook, with direct missile exchanges between Iran and Israel over the weekend pushing crude oil prices up by more than 4%. This escalation aggravates inflation concerns and dampens hopes of a comprehensive peace deal that would stabilise oil supplies. President Trump urged against interest rate rises and renewed calls for cuts, while his call on Israel not to retaliate against Iranian strikes was reportedly unheeded.
Investors are also bracing for a potential European Central Bank rate rise on Thursday and the initial public offering of SpaceX later in the week. Meanwhile, concerns about equity financing are mounting, with Alphabet announcing $80 billion in new equity sales last week and reports suggesting Meta is set to follow suit. Despite expectations of an ECB rate rise, the dollar has strengthened against the euro.
