Wall St snaps winning streak as SpaceX IPO looms and rate hike bets build
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The news: Wall Street’s nine-week winning streak ended on Friday as a stronger-than-expected US jobs report fuelled bets on a Fed rate hike, rattling markets already braced for a wave of fresh equity supply from the SpaceX IPO next week.
The numbers: The selloff was led by chipmakers and technology stocks, with the Nasdaq 100 falling 3.09% in early afternoon trading in New York. The S&P 500 was down 1.85% and the Philadelphia Semiconductor index over 7% lower, although it remains more than 75% higher for the year.
Broadcom contributed to the selloff, falling more than 5%, adding to a 12.5% drop the previous day when it failed to meet the most bullish revenue forecasts.
The context: The losses came one week before the anticipated listing of SpaceX, which Bloomberg reported had already received orders exceeding the shares available in its USD75 billion IPO.
As chips sold off, investors rotated into other sectors, with consumer staples leading gains as six of 11 major S&P 500 sectors were trading higher, Reuters noted.
Investors were also spooked by the prospects of higher interest rates following the jobs data, selling bonds and sending two-year Treasury yields 12 basis points higher to 4.16%, their highest level in about 15 months. Swap markets also fully priced in a Fed rate increase by year-end.
The data came ahead of newly appointed Fed chair Kevin Warsh’s first policy meeting on June 16-17, where he faces growing pressure for rate hikes rather than the cuts US President Donald Trump has argued for.
Trump pushed back on the market reaction, posting on social media that “stocks should go up, not down" following the jobs report, adding “growth does not mean inflation.”
White House National Economic Council director Kevin Hassett also pushed back, telling Bloomberg markets were “terribly wrong” to interpret the jobs data as signalling a rate hike, arguing the impact of oil-price shocks on core inflation was temporary.
Elsewhere, Bitcoin fell below USD60,000 for the first time since October 2024, extending a decline of more than 50% from its peak above USD126,000 last October.
The sources: Reuters, The Financial Times , Bloomberg
