It was a tumultuous week on Wall Street, characterized by sharp declines that challenged an AI-focused rally that previously appeared unassailable. Investor sentiment soured as two critical developments unfolded.
The first catalyst was Broadcom Inc. (NASDAQ:AVGO), a major player in the semiconductor industry. Despite beating quarterly expectations and projecting next-quarter sales of $29.4 billion—outpacing analysts’ forecast of $28.6 billion—CEO Hock Tan left the full-year AI semiconductor guidance unchanged at “in excess of $100 billion.” This move deflated bullish expectations among investors, leading to a significant selloff. On Thursday, Broadcom’s stock plummeted by 12.6%, followed by an additional drop of over 7% on Friday. This decline had a ripple effect through the broader AI infrastructure sector. The iShares Semiconductor ETF (NYSE:SOXX) slid more than 10% over the two days, marking its starkest two-day fall since the tariff shock of April 2025.
The second development that exacerbated the market volatility was the May jobs report. Non-farm payrolls increased by 172,000, far exceeding the 85,000 consensus estimate, with revisions for March and April adding another 93,000 jobs combined. The unemployment rate remained steady at 4.3%. However, what was once considered good news quickly turned into a source of concern for markets. The stronger-than-expected job growth, coupled with a year-over-year consumer price index rise of 3.8%—the most significant increase since May 2023—led to rising speculation in the bond market about impending interest rate hikes by the Federal Reserve. Money markets are now almost fully pricing in a rate increase by the end of the year.
Digital assets suffered particularly severe losses over the week, with Bitcoin (CRYPTO: BTC) slipping below $60,000, marking a 17% decline—the most significant drop since the FTX debacle in November 2022. Strategy Inc. (NASDAQ:MSTR), the world’s largest corporate holder of Bitcoin with over 843,000 coins, fell by approximately 25%. The company’s Chairman, Michael Saylor, disclosed he sold 32 Bitcoin for $2.5 million between May 26 and 31, breaking a long-standing policy of never selling his holdings.
Ford Motor Co. (NYSE:F) also experienced a rough week, witnessing a 15% decline after a four-week uptrend. The company announced a recall of nearly 420,000 Expedition and Lincoln Navigator SUVs (model years 2018-2022), affecting about 14,000 vehicles in Canada, due to a defect in the seat belt pretensioner that could pose increased injury risks in accidents.
As volatility returns to the market, the narrative surrounding potential Federal Reserve rate hikes gains traction, the AI rally is undergoing reevaluation, and the momentum in Bitcoin appears to be faltering. After nine consecutive weeks of gains, the market found multiple reasons for a necessary pause.
