Data released by the U.S. Bureau of Labor Statistics (BLS) last Friday showed that Nonfarm Payrolls increased by 172,000 in May, substantially exceeding market expectations. In addition, payroll figures for March and April were revised upward by a combined 93,000 jobs. The unemployment rate remained at 4.3%, while average hourly earnings increased 0.3% month-over-month and 3.4% year-over-year.

Overall, the U.S. labor market continues to demonstrate considerable resilience. Following the release of the stronger-than-expected employment data, markets further pushed back expectations for future Federal Reserve rate cuts. Several institutions lowered their forecasts for the number of cuts expected this year, contributing to higher Treasury yields and a stronger U.S. dollar. Investors increasingly began to reassess the possibility that elevated interest rates may remain in place for an extended period.

Treasury Yields Rise as Markets Reprice the Federal Reserve’s Policy Outlook

Following the employment report, U.S. Treasury yields moved notably higher. As of June 5, the 10-year U.S. Treasury yield rose to 4.54%, representing an increase of approximately 1.9% for the week.

Markets interpreted continued labor market strength as evidence that the Federal Reserve has little incentive to lower interest rates in the near term. Rising yields supported the U.S. dollar while creating headwinds for higher-valuation growth stocks. Investors increasingly returned to a “Higher for Longer” framework, with Treasury yields once again becoming a key driver of global asset pricing.

U.S. Equities Pull Back as Technology and AI Stocks Come Under Pressure

Driven by stronger employment data and shifting interest-rate expectations, major U.S. equity indices moved lower last week. As of June 6, the S&P 500 closed at 7,383.68, declining 2.45% for the week. The Nasdaq Composite fell 4.50% to 25,709.43, while the Dow Jones Industrial Average declined 0.23% to 50,866.78.

The Nasdaq’s significantly larger decline relative to the S&P 500 suggests a reduction in investor risk appetite toward high-valuation growth and technology stocks. Following its earnings release, Broadcom reported continued strong growth in AI-related semiconductor revenue; however, total revenue came in slightly below market expectations, and management did not raise its AI revenue outlook for the coming fiscal year. As a result, investors reassessed assumptions surrounding the AI capital expenditure cycle and valuation levels. The stock experienced heightened volatility following the announcement and weighed on broader semiconductor sector performance.

While investors have not abandoned the long-term AI growth narrative, market participants are increasingly focused on whether AI-related capital spending remains sustainable, whether earnings growth can justify current valuation levels, and whether future investments in data centers and cloud infrastructure can generate attractive returns. Market leadership is gradually shifting from AI growth expectations toward AI earnings realization.

Crude Oil Remains Elevated as Inflation Risks Stay in Focus

In energy markets, Brent crude oil remained near $93 per barrel, posting a gain of approximately 1% for the week. Investors continued to monitor developments in the Middle East and the outlook for global energy supply.

Market participants remain concerned that any escalation in geopolitical tensions could push oil prices higher and reignite concerns about inflation. Given that inflation control remains the Federal Reserve’s primary objective, energy prices are expected to remain an important driver of market sentiment and inflation expectations in the months ahead.