Nasdaq down 3%: Did a strong job data trigger a crash in US stock markets today?

Strong jobs report shakes markets

The sell-off began after the latest US jobs report showed the economy is still creating jobs at a strong pace. According to the Bureau of Labour Statistics, employers added 172,000 jobs in May, far above economists’ expectations of around 80,000. The unemployment rate remained steady at 4.3%.

Though strong job growth is usually seen as a sign of a healthy economy, investors worried that it could make it harder for the Federal Reserve to bring inflation under control. A stronger labour market can lead to higher wages and spending, which may keep inflation elevated.

As a result, traders increased their bets that the Fed could raise interest rates later this year. According to CME data, markets now see nearly a 70% chance of a rate hike by the end of 2026, up from less than 50% before the jobs report was released.

Treasury yields move higher

Expectations of higher interest rates pushed Treasury yields higher. The benchmark 10-year Treasury yield climbed above 4.5% and was last at 4.53%, while the 2-year Treasury yield rose to around 4.13%.

Higher bond yields often reduce the appeal of stocks because investors can earn better returns from safer government bonds. Technology shares are particularly sensitive to rising yields, which is why the Nasdaq saw the steepest decline.

Tech stocks lead the fall

Chipmakers and other technology stocks came under heavy selling pressure as investors reassessed lofty valuations in the sector. Commenting on the sharp fall in technology shares, Anshul Sharma, chief investment officer at Savvy Wealth told CNBC, “The AI narrative still remains intact, but I do think that the expectations got more elevated than they thought, and I think even relatively good news can end up disappointing when it’s not as high as where the expectations are.”

He added, “It’s going to make the Fed’s job a little bit more difficult in terms of the path forward. March and April payrolls were also revised upward, and so that gives more strength or more support to the notion that the labor market is stronger than what the headlines would say.”

Inflation concerns return

The strong jobs data added to existing worries about inflation, which has already been pushed higher by global energy market disruptions.

“Our base case remains that the Fed stays on hold through 2026, but if employment data continues to track around May’s pace, rate hikes this year would come firmly into play,” Seema Shah of Principal Asset Management told Bloomberg.

At its most recent policy meeting, the Federal Reserve kept interest rates unchanged in the 3.5%-3.75% range, but investors are increasingly questioning how long rates can stay on hold if economic data remains strong.

Bitcoin extends losses

The weakness was not limited to stocks. Bitcoin also continued its recent decline, falling 5% to around $60,450. Earlier in the session, it touched $60,028, its lowest level since October 2024.

Meanwhile, oil prices recovered slightly during the US trading session. Analysts at Deutsche Bank said, “Oil prices did rebound a bit during the U.S. session, but overall this didn’t derail the more optimistic mood following the ceasefire announcement by Israel and the Lebanese government the previous evening.”

Reacting to the market sell-off, President Trump wrote on social media, “With a great Jobs Report, like just announced, stocks should go up, not down.” He added: “Growth does not mean inflation!”

Disclaimer: This article provides factual analysis only and is not, and should not be construed as, an offer, solicitation, or recommendation to buy or sell securities. Investors must conduct their own independent due diligence and seek advice from a registered financial advisor in the respective jurisdiction.