Wall Street’s key indices closed sharply lower on Friday, as technology stocks experienced significant selling pressure. This followed a recent rally driven by investments in artificial intelligence (AI) and concerns about potential interest rate hikes by the US Federal Reserve.
Despite ongoing conflicts in Lebanon, oil prices fell. There has been no noticeable progress towards a peace deal between the US and Iran that would allow energy exports through the strategic Strait of Hormuz. In May, the US economy added 172,000 new jobs, significantly higher than the expected 80,000. This also included upward revisions for the previous two months, suggesting resilience in the economy despite rising energy costs.
Analyst Bret Kenwell noted that while these job figures are generally positive, they may create unease among borrowers and investors. He argued that a quick end to the conflict could help lower oil prices, which might allow the Fed to manage inflation pressures more effectively. However, increasing discussions about rate hikes could negatively impact stock market confidence.
Following the job data, yields on US Treasury bonds rose, as investors anticipated these higher interest rates. The US dollar also strengthened against other currencies. Major stock indices suffered losses, with the Nasdaq falling over four percent, while technology firms known as the “Magnificent Seven,” including Nvidia and Meta, saw declines.
Looking ahead, the market’s reaction suggests a cautious approach as investors await clarity on the Fed’s policy decisions and the situation in the tech sector.
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