US Equity Indexes Dive as Blockbuster Jobs Report Set to Eliminate Easing Bias in Fed Policy Statement

01:18 PM EDT, 06/05/2026 (MT Newswires) -- US equity indexes sank amid a slide in mega-cap chip names and government bonds, as strong jobs slashed the odds for monetary policy easing this year.

The Nasdaq Composite slumped 3% to 26,024.3, with the S&P 500 down 1.8% to 7,448.9, and the Dow Jones Industrial Average lower by 0.8% to 51,148.2 after midday Friday. Technology was the standout decliner, while healthcare and consumer staples topped the gainers.

In a third straight month of growth, nonfarm payrolls surged by 172,000 in May, above the 88,000 jobs increase expected in a Bloomberg-compiled survey. April was revised upwards to a 179,000 increase, and March payrolls were revised upwards to a 214,000 increase, the Bureau of Labor Statistics said Friday. The net upward revision came in at 93,000 jobs, bringing the 3-month average of payroll increases to 188,000, the strongest pace since March 2024, according to notes from Morgan Stanley and Stifel.

"We read this employment report as indicating the Fed can and will remove its easing bias in June," a Morgan Stanley research note said. "Perhaps exaggerated by a surge in state gov't payrolls and in leisure, but unquestionably strong labor demand."

The unemployment rate remained at 4.3% in May, per the BLS data, as expected. Hourly earnings rose by 0.3%, as expected, and faster than a 0.2% increase in April.

The probability of a 25 basis-point increase in interest rates in December surged to 43%, from 36% a week ago, according to the CME FedWatch tool. The comparisons for September were 33% versus 20%, and, for October, the data showed an increase to 39% from 25%.

US Treasury yields soared, with the 10-year up 5.1 basis points to 4.53% and the two-year higher by 10.6 basis points to 4.16%.

In precious metals, gold futures dropped 3.3% to $4,356.8, and silver futures slumped 7% to $68.84.

Skirmishes continued overnight between Hezbollah and Israel in southern Lebanon after the Iran-backed militant group rejected a US-brokered proposal aimed at securing a broader truce, Bloomberg reported. Even so, Hezbollah's attacks on northern Israel have eased, while Israel has held off striking Beirut after threatening to do so earlier this week, it added.

Tehran has made a ceasefire between Israel and Hezbollah a condition for any peace deal with Washington to resolve the regional war and restart shipping through the Strait of Hormuz, Reuters reported.

West Texas Intermediate crude oil futures declined 3.4% to $89.92, and Brent crude futures dropped 2.3% to $92.84.

In company news, Lululemon Athletica (LULU) shares slumped 9.2%, among the worst performers on the S&P 500, after the company reported a decline in fiscal Q1 earnings and cut its 2026 guidance.

Among the top gainers on the index was Cooper (COO), up 7.1%, after the firm reported stronger-than-expected growth in fiscal Q2 adjusted earnings and sales.

MT Newswires does not provide investment advice. Unauthorized reproduction is strictly prohibited.