By Stephen Culp and Medha Singh<\/p>\n
NEW YORK, June 5 (Reuters) – Wall Street tumbled on Friday as semiconductors extended their selloff while a robust employment report fueled fears of a hawkish policy pivot from the Federal Reserve.<\/p>\n
All three major U.S. stock indexes were in negative territory, with \u200can 8.1% plunge in chips, their steepest daily plunge since the “Liberation Day” tariff rout, dragging the tech-laden Nasdaq down 3.1%, its largest one-day percentage drop \u200csince October 10.<\/p>\n
Over the last three days of selloffs, tech and chips have tumbled more than 7.5% and 9.1%, respectively.<\/p>\n
The S&P 500 was poised to snap its nine-week run of Friday-to-Friday gains, its longest \u200bweekly winning streak since one that ended in December 2023.<\/p>\n
The Nasdaq was also on course to log a weekly decline, but the blue-chip Dow was set for a nominal gain on the week.<\/p>\n
Tech shares declined for a third straight session, falling 4.6%.<\/p>\n
The U.S. economy added 172,000 jobs in May, according to the Labor Department, more than double analyst expectations, while the unemployment rate held firm at 4.3%. The robust report was double-edged: it provided reassurance of U.S. economic health, but all but killed any hopes of an interest \u200crate cut from the Fed in the near future.<\/p>\n
“It\u2019s a \u2060good report, and it shows that the labor market has certainly survived its latest slowdown, and it’s another reason to believe that the Fed’s next move will be a hike in interest rates,” said Peter Cardillo, chief market economist at Spartan Capital Securities \u2060in New York.<\/p>\n
Financial markets are pricing in a 42.8% likelihood of a rate hike at the conclusion of the Fed’s December meeting, up from 38.2% on Thursday and 26.1% one month ago, according to CME’s FedWatch tool.<\/p>\n
Fading hopes for a near-term resolution to the Middle East war and reopening the Strait of Hormuz are stirring fears that energy price pressures could \u200bmorph \u200binto wider, systemic inflation.<\/p>\n
Iran reaffirmed its support for Hezbollah and demanded that Israel withdraw its troops \u200bfrom southern Lebanon, further complicating efforts to secure a near-term peace \u200cdeal that would include the resumption of traffic through the crucial strait. U.S. President Donald Trump’s administration has negotiated three truces, and while fighting has been greatly reduced, the two sides continue to trade airstrikes.<\/p>\n
The CBOE Market Volatility Index, often dubbed the “fear index,” surged to a two-week high.<\/p>\n
The Dow Jones Industrial Average fell 439.25 points, or 0.85%, to 51,122.68, the S&P 500 lost 138.07 points, or 1.82%, to 7,446.24 and the Nasdaq Composite lost 823.61 points, or 3.07%, to 26,007.35.<\/p>\n
Among the 11 S&P 500 sectors, tech was down the most, while consumer staples led the percentage gainers.<\/p>\n