- Markets lost $2.5T as S&P fell 1.65% Nasdaq 2.60% gold 3.38% and Bitcoin 6.31%.
- Jobs report doubled forecasts pushing rate hike probability from 40% to 57% in one day.
- Broadcom missed AI targets and Nvidia memory demand cut in half triggering global chip selloff.
Friday was not a normal down day. The S&P 500 fell 1.65% wiping out $1.14 trillion and the Nasdaq dropped 2.60% erasing $1.11 trillion. Gold crashed 3.38% losing $1 trillion and Silver also fell 6.9%. Bitcoin dropped 6.31% to $60,833, its lowest level in months.
Total destruction across assets in a single session neared $2.5 trillion.
The Jobs Report That Backfired
The trouble started Friday morning when the US economy reported adding 172,000 jobs in May against Wall Street’s expectation of 88,000. Nearly double the forecast.
On a normal day strong jobs data is good news. But inflation is running at 3.8% and oil is sitting at $90. A labor market this hot tells the Federal Reserve it cannot cut rates and may need to raise them.
President Trump addressed the issue saying, “With a great jobs report, stocks should go up not down. That’s the way it was for 200 years. Growth does not mean inflation.” Trump separately said at a Wisconsin campaign event he would quickly end the war with Iran, describing it as a major driver of high oil prices ahead of midterm elections.
Related: US economy adds 172,000 jobs in May, blowing past expectations
The AI Trade Started Cracking
Broadcom reported record earnings the previous day with revenue up 48% and AI chip sales up 143%. Its stock still crashed 12.6% because the company did not raise its full-year AI revenue targets.
Research firm SemiAnalysis revealed that Nvidia’s next-generation chips will require roughly half the memory the market had been pricing in. SK Hynix fell nearly 10%. Samsung fell over 6%. South Korea’s entire stock market dropped 5.5% in a single session. Anthropic then published a report warning that AI is approaching the point where it can improve itself without human intervention and called for a global pause in AI development.
The Liquidity Drain Nobody Was Talking About
SpaceX goes public next week at a $1.75 trillion valuation. Anthropic just filed to go public and OpenAI is next. These three companies together represent $4 to $5 trillion in anticipated market demand.
Fund managers need cash to participate in those listings but cash levels are already at their lowest since early 2024. The only way to raise cash is to sell existing positions and that selling might have accelerated Friday.
The Fed Wildcard
New Federal Reserve Chair Kevin Warsh holds his first policy meeting in 11 days. He was appointed by Trump with expectations of cutting rates. He now walks into a situation where inflation is high, oil is high, the job market is running hot, and markets are crashing. Nobody knows what he will do.
Related: Michael Saylor Outlines the Four Bitcoin Ideologies
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