Strong Jobs Data Sparks Rate Hike Fears, Weighs on Markets

The US economy added 172,000 jobs in May-more than double Wall Street's expectations-keeping the unemployment rate at 4.3%.

Markets reacted sharply. The Nasdaq composite dropped roughly 4% as the probability of a Fed rate hike by the end of 2026 surged to about 70%.

Eric Lynch, managing director at Suncoast Equity Management, flagged concerns over both potential tightening and lackluster returns from massive AI spending. Tech companies have poured billions into AI infrastructure without the expected payoff.

New Fed Chair Kevin Warsh faces hawkish signals from economic data, with market participants demanding clarity on direction.

For crypto investors, the tailwind of low rates is fading. Higher Treasury yields increase the opportunity cost of holding non-yielding assets like Bitcoin. The broader risk-off sentiment is spilling over into crypto markets.