Volkswacht Bodensee - Tech sell-off, rate-hike fears drive Wall Street plunge

Oil prices retreated despite continued clashes in Lebanon, with no apparent progress in reaching a US-Iran peace deal that would open up energy exports through the Strait of Hormuz.

Data showed the US economy added 172,000 jobs in May, far more than the 80,000 expected by economists polled by Dow Jones Newswires and The Wall Street Journal.

Figures for the last two months were also revised higher by 93,000 indicating the US economy is resilient as rising energy costs from the Middle East war begin to hit consumers and businesses.

While the figures are "good news for the US economy, borrowers and investors may feel differently," said eToro analyst Bret Kenwell.

In a best scenario, he said, a rapid resolution of the conflict that allows oil prices to drop would allow the US Federal Reserve to ride out the recent spike in inflation.

"However, if policymakers even start talking about rate hikes or taking a more hawkish posture, that could throw cold water on the recent stock market surge," Kenwell said.

Yields on US Treasury bonds rose in response to the data as investors anticipated higher rates to come from the Fed.

The dollar rose against main rivals as well.

"This report adds to pressure on the Fed to drop its easing bias, but it may not trigger a rush to price in rate hikes anytime soon," said Kathleen Brooks at XTB.

Wall Street's main indices all saw significant losses, with the Nasdaq plunging more than four percent, the S&P 500 more than two percent and the Dow more than one percent.

After pushing equity markets to record highs this year, technology firms are facing selling pressure on concerns that the eye-watering sums pumped into AI may have been overdone.

The so-called "Magnificent Seven," which includes AI players Nvidia, Google-parent Alphabet and Meta, closed lower.

Meta's stock was also weighed down by reports the company was considering a stock offering to raise tens of billions of dollars in funding for its AI push.

US chipmaker Broadcom also sparked concern this week after its revenue forecast for the third quarter undershot expectations.

Broadcom's shares fell almost eight percent on Friday, and those of rival Micron Technology dropped more than 13 percent.

"Everyone's realizing that perhaps this rally off the March lows has run its course for the time being," said Briefing.com's Patrick O'Hare.

"So you have sort of some blanket selling today by plenty of investors who ran with this thing as long as they could run with it."

Tech tremors also hit Asian markets.

South Korea's tech-heavy stock market tanked almost seven percent at one point Friday, before ending down 5.5 percent.

The Nikkei in Tokyo was off more than one percent, matching Thursday's retreat.

The losses come as investors anticipate the coming IPO by Elon Musk's SpaceX, which is aiming to raise $75 billion in the world's biggest initial public offering.

In Europe, both Frankfurt and Paris ended lower after official data showed a contraction in eurozone economic growth in the first quarter, which was dragged down by a sharp decline in Irish output due to accounting measures of multinationals.

- Key figures at around 2000 GMT -

Brent North Sea Crude: DOWN 2.0 percent at $93.09 a barrel

West Texas Intermediate: DOWN 2.7 percent at $90.54 a barrel

New York - DOW: DOWN 1.4 percent at 50,866.78 points (close)

New York - S&P 500: DOWN 2.6 percent at 7,383.74 (close)

New York - Nasdaq: DOWN 4.2 percent at 25,709.43 (close)

London - FTSE 100: UP less than 0.1 percent at 10,368.05 (close)

Paris - CAC 40: DOWN 0.3 percent at 8,218.24 (close)

Frankfurt - DAX: DOWN 0.8 percent at 24,759.05 (close)

Tokyo - Nikkei 225: DOWN 1.3 percent at 66,588.12 (close)

Hong Kong - Hang Seng Index: DOWN 1.2 percent at 24,961.95 (close)

Shanghai - Composite: DOWN 0.7 percent at 4,027.74 (close)

Euro/dollar: DOWN at $1.1520 from $1.1610 on Thursday

Pound/dollar: DOWN at $1.3333 from $1.3423

Dollar/yen: UP at 160.23 yen from 160.03 yen

Euro/pound: DOWN at 86.41 pence from 86.50 pence

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D.Schaer--VB