The U.S. economy added 172,000 jobs in May, more than double the 80,000 to 85,000 analysts had forecast. The report triggered one of the sharpest single-day selloffs in over a year, hitting equities, semiconductors, and crypto.
Money markets now price in a 98% probability of a 25-basis-point rate hike by year-end, up from 60% before the data. The unemployment rate held steady at 4.3%, but job creation that doubled expectations painted a picture of an economy running hotter than the Fed wants.
The Nasdaq fell 4.18% for its largest one-day percentage loss since April 2025. The S&P 500 dropped 2.64%, and the Dow Jones declined roughly 1.35%, ending a nine-week winning streak. Semiconductor stocks led the carnage. The Philadelphia Semiconductor Index posted its worst single-day percentage decline since March 2020. Chip stocks collectively erased an estimated $1 trillion to $1.3 trillion in market value in a single session.
Bitcoin dropped more than 4%, approaching the $60,000 level. Crypto-adjacent equities fared even worse. Coinbase, MicroStrategy, and Robinhood all declined between 6% and 12%.
Stronger-than-expected employment data reduces the likelihood of near-term rate cuts. Lower rates generally mean more liquidity in financial markets, which tends to flow into riskier assets like Bitcoin. When the rate-cut narrative evaporates, one of crypto's key bullish catalysts vanishes.
With a 98% implied probability of a rate hike, growth stocks become less attractive when discount rates rise. The semiconductor space, despite strong tailwinds from AI demand, now faces higher borrowing costs and compressed multiples. Bitcoin's correlation with risk assets has been climbing, offering less diversification benefit precisely when needed most.