WASHINGTON (dpa-AFX) - After coming under considerable pressure early in the session, stocks showed an even more substantial move to the downside over the course of trading day on Friday. The major averages all moved sharply lower, with the tech-heavy posting a particularly steep loss.
The major averages ended the day just off their lows of the session. The Nasdaq plunged 1,121.53 points or 4.2 percent to 25,709.43, the S&P 500 tumbled 200.57 points or 2.6 percent to 7,383.74 and the Dow slumped 695.15 points or 1.4 percent to 50,886.78.
With the steep losses on the day, the major averages all moved lower for the week. The Nasdaq plummeted by 4.7 percent, the S&P 500 dove by 2.9 percent and the Dow dipped by 0.3 percent.
The sell-off on Wall Street came as technology stocks remained under pressure after seeing notable weakness during Thursday's session.
Yesterday's negative reaction to Broadcom's (AVGO) guidance continued to generate selling pressure amid concerns about valuations.
'The market is no longer asking whether AI demand is strong, that has largely been established,' said Daniela Hathorn, Senior Market Analyst at Capital.com. 'Instead, investors are beginning to question how much of that growth is already reflected in valuations.'
She added, 'In that sense, Broadcom's results may not have been disappointing, but they were perhaps not enough to justify another leg higher immediately after such a powerful rally.'
Profit taking also contributed to the substantial weakness following recent strength in the markets, which lifted the Nasdaq and S&P 500 to record closing highs on Tuesday. The Dow also ended Thursday's session at a record closing high.
A sharp increase by treasury yields also weighed on Wall Street, with yields surging following the release of stronger than expected U.S. jobs data.
The Labor Department released a report showing non-farm payroll employment shot up by 172,000 jobs in May after surging by an upwardly revised 179,000 jobs in April.
Economists had expected employment to climb by 85,000 jobs compared to the addition of 115,000 jobs originally reported for the previous month.
The data has added to recent speculation that the Federal Reserve will leave interest rates at their current level for an extended period.
Sector News
Semiconductor and computer hardware stocks turned in some of the market's worst performances on the day, with the Philadelphia Semiconductor Index and the NYSE Arca Computer Hardware Index plummeting by 10.3 percent and 9.1 percent, respectively.
Outside of the tech sector, gold stocks also saw substantial weakness amid a steep drop by the price of the precious metal, resulting in an 8.4 percent nosedive by the NYSE Arca Gold Bugs Index.
Networking, oil service and software stocks also showed significant moves to the downside, while utilities and pharmaceutical stocks bucked the downtrend.
Other Markets
In overseas trading, stock markets across the Asia-Pacific region moved mostly lower on Friday. China's Shanghai Composite Index fell by 0.7 percent, Japan's Nikkei 225 Index tumbled by 1.3 percent and South Korea's Kospi plummeted by 5.5 percent.
Most European stocks also moved to the downside on the day. The German DAX Index slid by 0.8 percent and the French CAC 40 Index dipped by 0.3 percent, although the U.K.'s FTSE 100 Index bucked the downtrend and inched up by 0.1 percent.
In the bond market, treasuries moved sharply lower in reaction to the stronger than expected job data. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, surged 5.9 basis points to 4.536 percent.
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