Global stocks plunge on rising interest-rate fears and Middle East conflict as S&P 500 falls 2.64%, Nasdaq drops 4.18%, ahead of SpaceX IPO

The S&P 500 declined 2.64% on Friday; the Nasdaq fell 4.18%; the Philadelphia semiconductor index collapsed 10.26%. Globally, South Korea's KOSPI dropped 8.29%, Japan's Nikkei 225 fell 3.85%, and Europe's Stoxx 600 was down 0.75% in early trading.

U.S. payrolls rose 172,000 in May, far above consensus expectations of around 88,000. However, job gains were concentrated in only three sectors: leisure and hospitality, government, and private education and health care services, with only 10,000 jobs created outside those sectors. Wall Street analysts now say further Fed interest rate cuts are off the table, with many predicting rate increases later this year.

Bank of America reports hyperscaler supply of new debt reached $159 billion year-to-date, which is 91% of their $175 billion forecast for the full year (compared to roughly $121 billion last year). Investors are resisting purchases of this new supply despite major firms like Google issuing $85 billion in stock and Meta considering similar moves to fund AI data center buildouts.