US Equity Indexes Plummet as Dwindling Expectations for Monetary Policy Easing Decimate Mega-Cap Technology

04:43 PM EDT, 06/05/2026 (MT Newswires) -- US equity indexes plunged amid a slide in mega-cap chip names and government bonds, as a strong jobs report slashed the odds for monetary policy easing this year.

The Nasdaq Composite nosedived 4.2% to 25,709.43, with the S&P 500 down 2.6% to 7,383.74, and the Dow Jones Industrial Average lower by 1.4% to 50,866.78 on Friday.

Technology sank with consumer discretionary, materials, and communication services. Consumer staples led 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.

"We see the next move as a hike with our baseline timing being in 1Q27," said David Doyle, head of economics at Macquarie. "Risks to this have become skewed to an earlier hiking with markets now discounting a hike in 4Q26."

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 34% versus 20%, and, for October, the data showed an increase to 40% from 25%.

US Treasury yields soared, with the 10-year up 6.1 basis points to 4.54% 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.

A potential peace deal between the US and Iran hinges on US President Donald Trump's administration agreeing to release $24 billion in frozen Iranian assets, Mohsen Rezaei, military adviser to Supreme Leader Ayatollah Mojtaba Khamenei, told CNN from Tehran, warning that the US would "enter into a dark corridor" should it resume fighting.

"The negotiations are at a deadlock and Trump must break this deadlock," Rezaei was cited as saying. "The ball is in Trump's court."

West Texas Intermediate crude oil futures declined 2.4% to $90.62, and Brent crude futures fell 1.9% to $93.18.

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 Companies (COO) , up 7.1%, after the firm reported stronger-than-expected growth in fiscal Q2 adjusted earnings and sales, and lifted its fiscal 2026 outlook for non-GAAP diluted earnings per share.

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