S&P 500 falls 2.64% as strong jobs data dims Fed rate-cut hopes
In brief
- S&P 500 fell 2.64%; Nasdaq dropped 4.18%, worst session since April 2025
- May payrolls: 172,000 jobs, more than double the 80,000 economists expected
- 10-year Treasury yield surged near 4.5%, reducing Fed rate-cut odds
- Bitcoin lost 20% in one week, down 50% from October 2025 peak
Jobs Data Triggers Equity Selloff
Employers added 172,000 jobs in May, crushing forecasts and delivering what traders read as bad news for rate-cut hopes. The unemployment rate held steady at 4.3%, adding to the hawkish tone. The Nasdaq Composite fared even worse, tumbling 4.18% in its worst session since April 2025. For the week, the S&P 500 shed 2.5%.
The blowout report hit markets hard. The 10-year Treasury yield surged to near 4.5% during intraday trading, reflecting rapidly diminishing odds that the Fed will deliver rate cuts this year. Rising yields pressure equities (especially growth stocks) and crypto, which offer no cash flow to discount against higher risk-free rates.
Crypto Takes a Beating
Bitcoin didn't escape the carnage. The token lost more than 20% in value over the past week alone and sits more than 50% below its October 2025 peak. The broader digital-asset complex has been hit even harder—the crypto market has shed roughly $2.5 trillion in total value since that high-water mark.
The selloff reflects a broader rotation. When rate-cut odds evaporate, risk assets lose their appeal. Traders who'd been betting on a softer Fed pivot now face a longer runway of elevated rates. That repricing hits crypto especially hard, given its sensitivity to discount-rate expectations and its lack of intrinsic cash flows to anchor valuations.
What Comes Next
The path forward hinges on how inflation data and Fed communications evolve. If wage growth from this jobs beat starts to show up in core CPI, the case for rate cuts weakens further. If inflation cools, equities and crypto may stabilize. For now, the 10-year yield remains the signal to watch—it'll tell you whether this is a temporary shock or the start of a longer repricing.
