Australian investors woke up to a dramatic sell-off in US equities, with the tech-heavy Nasdaq Composite plummeting over 4% and the S&P 500 falling 2.6%. The Dow Jones Industrial Average also lost 1.4%. This sharp decline was triggered by May’s US payrolls data, which came in far stronger than anticipated, adding 172,000 jobs and holding the jobless rate steady at 4.3%. The robust jobs report bolstered the case for an interest rate rise, sending gold sliding and volatility spiking.
Tech Sector Bears the Brunt
The information technology sector declined 5.8%, while the Philadelphia semiconductor index closed down 10.3%. High-flying tech companies like Marvell Technology, Micron Technology, Arm Holdings, and Intel saw substantial losses. The “Magnificent Seven” — including Tesla, Nvidia, and Meta Platforms — each dropped sharply. A reported surge in demand for shares in SpaceX ahead of its trading debut also added to the selling pressure.
Market Strategists Weigh In
Charlie Bilello, chief market strategist at Creative Planning, noted that “downside volatility is the price of admission for investors,” advocating for embracing such risk. Conversely, John Flood, head of Americas equities execution services at Goldman Sachs, viewed the sell-off as a buying opportunity, citing historical trends where S&P 500 pullbacks have paid off. While the S&P 500 snapped its nine-week winning streak, the benchmark remains up about 8% year-to-date.
What’s Next?
Economists remain mixed on how Federal Reserve policymakers will interpret the strong jobs data ahead of their upcoming meeting. Views range from concerns about cyclical overheating to acknowledgments of vigorous employment increases. Investors should brace for potential volatility as the market digests these developments.
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