The Nasdaq suffered its biggest one-day fall since April 2025 on Friday, sliding more than 4% as a surprisingly strong US jobs report triggered a wave of selling across Wall Street. The S&P 500 closed 2.6% lower and the Dow Jones Industrial Average dropped 1.35%, ending the week firmly in the red.
The sell-off was sparked by April’s jobs figures, which stoked fears that the Federal Reserve will keep interest rates higher for longer amid stubborn inflation. While a robust labour market is typically welcome news, investors interpreted the data as a sign that borrowing costs would remain elevated, dashing hopes of imminent rate cuts.
“Tech shares led a Wall Street rout after a surprisingly strong US jobs report raised fears of higher interest rates.”
David Doyle, head of economics at Macquarie Group, described the jobs report as potentially “too good”, warning it raised the likelihood the Federal Reserve will raise rates this year. His assessment contributed to a rapid shift in market sentiment, as traders who had been banking on lower rates were forced to abandon their positions.
The jitters were not limited to equities. Bitcoin, the largest cryptocurrency, dropped sharply as investors rushed to offload riskier assets across the board.
Rather than a broad market panic, Friday’s rout was concentrated in technology stocks. Critics have long warned that shares in AI and microchip companies are overvalued, drawing comparisons to the dotcom bubble of the early 2000s. Major investment funds pulled money out of those sectors, redirecting capital into traditionally safer havens such as healthcare, utilities and consumer staples. Companies including Kraft Heinz and Keurig Dr Pepper saw a boost as traders sought stability.
The sudden drop underscored how vulnerable big tech has become. With a handful of companies accounting for a large chunk of the stock market, any shift in investor sentiment can drag the entire market down.
Reacting to the sell-off, US President Donald Trump criticised the negative reaction. “Too much emphasis is placed on inflation,” he said. “I hope the market starts to learn that when you have good numbers the market should go up not down.”
Next week, tech and politics will be in focus once more. Trump has invited top AI executives to the White House to discuss a new proposal: the US government acquiring public stakes in their firms. He argued the move would allow everyday Americans to “benefit from the success of AI”. How that plan might sit with a market already jittery about tech valuations remains to be seen.