US stock markets suffered their worst trading session of the year on Friday as investors reacted to stronger-than-expected jobs data and a sharp sell-off in AI-related technology shares.

The S&P 500 fell 2.64 percent, marking its steepest one-day decline since October and ending a nine-week winning streak.

The Nasdaq Composite dropped 4.18 percent, its worst performance since April 2025, while the Dow Jones Industrial Average lost 695 points.

Markets turned sharply lower after new figures from the Bureau of Labor Statistics showed the US economy added 172,000 jobs in May, beating forecasts.

Investors fear the strong labour market and rising inflation could push the Federal Reserve towards another interest rate hike later this year.

“In the near term the data confirms that Fed easing is off the table this year, and markets continue to worry that the next move could be a hike,” James McCann, senior economist for investment strategy at Edward Jones, said in a note.

AI and semiconductor stocks were among the hardest hit. Broadcom shares extended losses after weak guidance earlier this week, while reports that Meta is seeking new funding for its AI expansion also pressured tech stocks.

Bitcoin fell more than five percnet, while gold prices dropped over 3.5 percent as investors moved away from riskier assets.

“Markets have spent months searching for a reason for the Federal Reserve to cut rates. Today’s jobs report gave policymakers a reason not to do so,” Nigel Green, CEO at deVere Group, said.