Morning Brief: May Nonfarm Payrolls Smash Expectations, Fueling Rate-Hike Fears; Nasdaq Plunges Over 4%, Semiconductor Index Tumbles 10% in One Day Key Snapshot

📊 US May nonfarm payrolls rise by 172,000 (vs. 85,000 expected), nearly doubling forecasts; unemployment rate holds at 4.3%.

📉 Nasdaq plunges 4.18%; the semiconductor index crashes 10% in a single day, erasing over $1 trillion in market value, marking its worst one-day drop in six years.

🛢️ Iran strikes Israel again after two months; WTI crude settles down 2.69% at $90.54/bbl.

💰 Goldman Sachs no longer expects Fed rate cuts this year; the “new Fed mouthpiece” warns Fed hawks may restart rate hikes.

I. Market Outlook Core Events: US May nonfarm payrolls surge by 172,000, far exceeding the 85,000 consensus; unemployment rate stays at 4.3%. The data sparks fears of Fed rate hikes within the year, triggering a rout in highly valued, overcrowded AI and tech stocks. Trump says he wants lower interest rates but leaves the decision to Walsh, adding the government has “multiple options” to address oil prices.

Market Reaction: Nasdaq collapses 4.18%; the semiconductor index plummets 10% (six-year worst), with Nvidia down 6.2% and AMD, Broadcom falling 7.9%–13.3%. The 2-year Treasury yield spikes 15 bps to 4.15%, while the 10-year rises 5.7 bps to 4.53%. Spot gold crashes 3.28% to $4,328.70/oz**; silver drops **8.05%**. Bitcoin briefly falls below **$60,000.

Exclusive Insight: The 172,000 vs. 85,000 payroll print is a “nuclear” surprise. Markets had priced in a “soft landing + rate cuts” scenario but are now forced to pivot to “no cuts + possible hikes.” Tech stocks, the most rate-sensitive sector, were ripe for a crash. Trump’s decision to delegate rate policy to Walsh is critical—“wanting cuts but deferring to Walsh” signals the White House is distancing itself from potential Fed tightening.

II. Overnight Market Action Summary A blowout nonfarm payroll report fuels rate-hike anxiety, triggering a tech selloff, soaring Treasury yields, and a gold meltdown.

— US Equities: S&P 500 falls 2.64% to 7,383.74, down 2.59% week-to-date. Dow Jones drops 1.35% to 50,866.78, down 0.32% weekly. Nasdaq plunges 4.18% to 25,709.43, down 4.68% week-to-date.

💡 The semiconductor index tumbles 10% in a day; Nvidia falls 6.2%, while Intel, Micron, AMD, and Broadcom slide 7.9%–13.3%. Meta drops 5.5% (weighing on AI capex plans via stock offerings). Overcrowded tech positioning made the payroll data a catalyst for a mass exodus.

— European Equities: STOXX 600 closes down 0.29% at 622.66, down 0.53% week-to-date.

💡 European stocks outperform US peers, with less sensitivity to Fed hikes, though energy prices and ECB tightening remain headwinds.

— Fixed Income: US 10Y yield rises 5.74 bps to 4.5303%, up 9.49 bps weekly. The 2-year yield jumps 10.39 bps to 4.1470%, up 14.30 bps week-to-date. 💡 Treasuries sell off sharply post-payrolls, with the 2-year rate spiking 15 bps intraday. Markets are rapidly pricing “no 2024 cuts + potential hikes.”

— Commodities: Spot gold falls 3.28% to $4,328.70/oz, down 4.62% weekly. Silver plunges 8.05% to $67.9295/oz. WTI July crude settles down 2.69% at $90.54/bbl; Brent August crude falls 2.04% to $93.09/bbl.

💡 Gold crashes over 3% to $4,328/oz, pressured by soaring real yields and a stronger dollar. Silver leads losses with an 8% drop. Oil falls despite Iran’s Israel strike, as demand fears trump geopolitical risks.

— FX Market: EUR/USD falls 0.78% to 1.1523; USD/JPY rises 0.09% to 160.17.

💡 The dollar index surges on payrolls and geopolitical safe-haven demand. The yen weakens past 160.17, breaching intervention levels without visible action.

— Crypto Assets: Bitcoin plunges 7% to below $60,000 (first since Oct 2024); Ethereum crashes 11% in a day, down over 20% week-to-date.

💡 Bitcoin breaks the **$60,000 psychological level, hammered by high rates and a strong dollar. As high-beta assets, cryptos underperform US equities in a hiking scenario.

III. Macro Headlines

📊 US May nonfarm payrolls rise by 172,000 (vs. 85,000 expected), nearly doubling forecasts; unemployment rate holds at 4.3%. “New Fed mouthpiece” Timiraos: Fed hawks may restart rate hikes. Goldman Sachs no longer expects Fed cuts this year. Insight: The 172,000 vs. 85,000 print is one of the biggest payroll “beats” in recent years. Markets have shifted from “September cut” to “no 2024 cuts + possible hikes.” Walsh faces intense pressure in his first rate decision.

⚠️ Iran strikes Israel again after two months; Israeli air defenses intercept incoming missiles, with air-raid sirens across multiple regions. Trump says Iran’s missile launch “was enough” and insists the US will “soon get out” of the Iran conflict. US forces target Iranian assets; air-raid sirens sound in Bahrain and Kuwait. Insight: Iran’s strike comes right after the payroll data—a notable timing. Market reaction shows geopolitical risks have taken a backseat to “rate-hike panic.” Oil’s decline signals investors fear high rates will crush demand more than supply disruptions.

🏛️ Trump: “I want lower interest rates, but I’ll leave the decision to Walsh.” Trump says he will delegate the October rate decision to Walsh, noting the government has “multiple options” for oil prices and plans to meet with AI firms. Insight: Trump is deliberately distancing himself from potential hikes—“wanting cuts but deferring to Walsh” appeases voters upset over high rates while giving Walsh political space to tighten. A shrewd political move.

IV. Corporate News

💡 Broadcom CEO: “I never care about stock prices—focus on technology, and customers will stay.” Apollo, Blackstone, and Broadcom jointly raise $35 billion** for Anthropic to lease TPUs from Google. Broadcom bullish on the “Broadcom-Google-Anthropic” iron triangle. — Broadcom CEO’s “no care for stock prices” comment is an indirect response to Friday’s crash. The $35 billion “chip financing” deal marks a new model—private capital directly funding AI compute, creating a closed loop between Broadcom, Google, and Anthropic.

🚀 Jensen Huang: New Vera chips will use SK Hynix memory; chip shortages will persist for years. Nvidia and SK Hynix announce partnership plans. — Huang’s “years-long chip shortage” comment is a strong endorsement of the long-term AI narrative. Deepening ties with SK Hynix signal Nvidia’s evolution from a “GPU company” to a “full-stack AI compute platform.”

🛰️ SpaceX signs $70 billion in combined deals with Anthropic and Google; “compute leasing” ARR reaches $26 billion. Social media buzz: SpaceX plans to use IPO proceeds for “space data centers”—why lease compute to Google and Anthropic at premium rates? — The answer: “compute arbitrage.” SpaceX builds space data centers with IPO funds, leases capacity to AI firms for stable $26 billion ARR, then uses cash flow to fund its Mars colony vision. A brilliant financial structure—using Earth’s AI demand to finance space dreams.

V. Key Focus Today

🗣️ Apple WWDC: Updated Siri expected—showcasing AI strategy, with Siri upgrades as the core highlight; can it narrow the gap with ChatGPT?

📊 Zhipu AI and Minimax set to join Hang Seng Tech Index: First Chinese AI firms included, triggering passive inflows.

📈 Japan Q1 final GDP: Confirming recovery strength, impacting BoJ tightening timing.