Tech and chip stocks drive US market selloff

U.S. equity markets sold off sharply on June 5, 2026, as investors reacted to stronger-than-expected labor data and renewed concerns over interest rate increases. The declines were led by large technology and semiconductor names, which had previously powered major index gains.

The S&P 500 (SPX) fell 2.64% to 7,383.74, while the Nasdaq Composite dropped 1,121.53 points, or 4.18%, to 25,709.43. The Dow Jones Industrial Average (DJIA) also retreated, losing 695.15 points, or 1.35%, to close at 50,866.78.

The pullback ended the S&P 500 (SPX)’s nine-week winning streak and marked a clear shift away from recent momentum-driven buying. Market commentary highlighted profit-taking in areas seen as most exposed to higher borrowing costs and elevated valuations.

The Labor Department reported that the U.S. economy added 172,000 jobs in May 2026, a figure described in market reports as stronger than expected. The data reinforced views that economic activity remains resilient.

In response, Treasury yields moved higher, with the 10-year yield rising to about 4.54% on June 5, 2026. Higher long-term yields fed into expectations that the Federal Reserve could tighten policy further later in the year.

CME FedWatch pricing showed roughly a 43% probability of an interest rate increase at the Federal Reserve’s December 2026 meeting following the jobs release. The shift in rate expectations contributed to broad risk-off sentiment across equities.

Semiconductor and AI-related stocks were at the center of the selloff. The Philadelphia SE Semiconductor Index recorded its largest one-day percentage plunge since March 2020 and erased more than $1 trillion in market value on June 5, 2026.

Broadcom (AVGO) was a notable laggard in the sector. Its shares fell around 7.92% after the company issued weaker-than-expected chip-revenue guidance earlier in the week, an update cited by traders as intensifying pressure on AI- and memory-focused chip names.

The slump in chipmakers weighed heavily on broader technology benchmarks and reinforced investor concerns about whether recent gains in AI-linked stocks had outpaced earnings and revenue trends.

Measures of market volatility rose alongside the equity declines. The CBOE VIX index surged roughly 40% to its highest level in two months on June 5, 2026, reflecting increased demand for downside protection.

The combination of hotter labor data, higher Treasury yields, and a concentrated selloff in high-growth sectors prompted investors to reassess risk exposure. Trading flows shifted from momentum-driven buying toward profit-taking in parts of the market seen as most sensitive to interest rate expectations.

Market observers linked the day’s moves to a rapid reset in sentiment, as participants weighed resilient economic data against the prospect of tighter monetary policy and its impact on richly valued technology and semiconductor stocks.