S&P 500, Nasdaq fall as strong jobs data lifts Treasury yields

US stocks declined on Friday, June 5, with the S&P 500 and Nasdaq weighed down by a sharp sell-off in semiconductor shares and a jump in Treasury yields after a stronger-than-expected jobs report

reinforced expectations that the Federal Reserve could keep monetary policy tighter for longer.

The S&P 500 fell 0.6%, while the Nasdaq Composite dropped 1.1%, dragged lower by weakness in chipmakers. The Dow Jones Industrial Average was little changed in early trade.

Investor sentiment took a hit after data from the US Bureau of Labor Statistics showed nonfarm payrolls increased by 172,000 in May, comfortably ahead of economists' expectations of around 80,000-88,000 jobs. The unemployment rate remained unchanged at 4.3%, in line with forecasts.

The robust labour market data prompted a rise in Treasury yields as traders pared expectations of near-term Federal Reserve rate cuts and increased bets that policymakers could maintain a restrictive stance for longer. The benchmark 10-year Treasury yield climbed above 4.5%, while the 30-year yield rose past 5%.

Technology stocks bore the brunt of the sell-off, led by semiconductor names. Broadcom shares fell about 3%, extending losses after plunging more than 12% in the previous session following its earnings report. Marvell Technology dropped over 6%, while Micron Technology declined around 5%.

The stronger-than-expected employment figures underscored the resilience of the US economy, but also reignited concerns that persistent labour market strength and elevated inflation could delay any policy easing by the Federal Reserve.

Markets are now closely watching upcoming inflation readings and Fed commentary for further clues on the path of interest rates through the remainder of the year.