Strong May jobs, Broadcom AI warning push stocks lower

U.S. stocks fell after a stronger-than-expected May jobs report and a weaker AI outlook from Broadcom pushed Treasury yields higher. The S&P 500 closed down 1.69% at 7,457 and the Nasdaq fell 2.82% to 26,074 as the 10-year Treasury yield reached about 4.54%.

Payrolls increased by 172,000 in May, compared with roughly 80,000 expected, while the unemployment rate held at 4.3%. Traders reacted by fully pricing a quarter-point Federal Reserve rate hike by December. The average 30-year fixed mortgage rate was about 6.66% on the day, compared with 6.87% on the same date last year.

Broadcom reported quarterly results on June 3 that beat estimates but guided third-quarter AI revenue to $16 billion, below market expectations of $17.2 billion, and did not raise its long-term $100 billion AI target. Broadcom’s stock fell about 15% on June 4 and declined a further roughly 6% in subsequent trading. The company’s guidance coincided with a selloff across semiconductor names: Nvidia slipped about 4%, while AMD and Intel each lost roughly 8%.

Higher Treasury yields coincided with declines in growth and high-beta technology stocks and inflows into sectors seen as more defensive or yield-bearing. Consumer staples rose about 1.88%, healthcare gained 1.01%, and real estate added 0.74%. Utilities edged up roughly 0.20%. Technology declined about 4.29% and basic materials fell about 4.36%. Energy lost 1.65% and financials slipped about 0.53%. Market breadth was negative, with decliners leading 67.7% to 28.7%.

Several individual stocks recorded large moves. Oracle fell about 8.45% and Micron dropped 8.08%. Intel and AMD each gave back much of their May gains, and Robinhood declined about 7% as Bitcoin traded below $60,000, reducing crypto-related trading revenue for the firm.

Traders are watching key price levels and economic data for signs of where markets go next. Technical attention is focused on whether the S&P 500 can reclaim 7,628; a move below 7,448 and then 7,332 would be monitored for downside risk. Investors will also track upcoming inflation readings, future job reports, whether the 10-year yield holds above current levels, and crypto price action into the next session.