The tech-heavy Nasdaq index suffered its biggest one-day drop since April 2025 on Friday, plunging more than 4% after a surprisingly strong US jobs report for April sparked a broad sell-off. The S&P 500 closed 2.6% lower and the Dow Jones Industrial Average fell 1.35%, as fears mounted that the Federal Reserve will keep interest rates higher for longer amid stubborn inflation.
While a robust jobs market is normally a sign of economic health, the data raised the opposite fear among investors: that borrowing costs will stay elevated, or even rise. David Doyle, head of economics at Macquarie Group, described the jobs figures as potentially "too good" against the backdrop of high inflation, and said they increased the likelihood the Fed will raise rates this year. That forced investors who had been betting on rate cuts to abruptly change course.
“Tech stocks crash hardest as Wall Street suffers worst day since April after strong US jobs data fuels rate fears”
The sell-off was concentrated in technology stocks, which critics have warned are overvalued and reminiscent of the dotcom bubble of the early 2000s. Major investment funds pulled money out of AI and microchip companies whose share prices had soared in recent years. But rather than fleeing the market entirely, traders piled into safer sectors such as healthcare, utilities and consumer staples, including Kraft Heinz and Keurig Dr Pepper.
Digital assets also suffered a sharp drop, with Bitcoin falling as investors offloaded riskier assets.
US President Donald Trump reacted to the market's decline by criticising the negative response to the jobs report. "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 are set to collide further when Trump hosts top AI executives at the White House. He has proposed that the US government acquire public stakes in their firms, a move he claims will allow everyday Americans to "benefit from the success of AI".