US stocks suffer worst blow of 2026 after strong labour stats reveal

The American stock exchange suffered its sharpest sell-off of the year this week as investors dumped technology shares and reassessed expectations for Federal Reserve interest rates following stronger-than-expected labour market data.

The broad-based S&P 500 dropped 2.64% in its worst single-day performance on June 5 since October, erasing its gains for the week and bringing a nine-week winning streak to an end, US media reports.

The tech-heavy Nasdaq Composite fared even worse, plunging 4.18% for its biggest daily decline since April 2025 as AI-related stocks came under heavy selling pressure. The Dow Jones Industrial Average, which has less exposure to the technology sector, fell 695 points, or 1.35%, marking its steepest decline in roughly three months.

Market volatility also surged as investors took profits after months of strong equity gains while recalibrating expectations for monetary policy. Wall Street's closely watched volatility index, the VIX, jumped 40% to its highest level in two months.

The sell-off extended beyond equities. On June 5, investors also sold US government bonds, bitcoin and gold after robust employment figures reinforced expectations that the Federal Reserve may keep interest rates elevated for longer—or even consider further tightening.

While strong job growth points to continued resilience in the US economy, it also complicates the inflation outlook by reducing pressure on the Federal Reserve to begin cutting borrowing costs.

"In the near term the data confirms that Fed easing is off the table this year, and markets continue to worry that the next move could be a hike," James McCann, senior economist for investment strategy at Edward Jones, was cited by the media outlet.

By Nazrin Sadigova