US stocks slump as fears over Big Tech shake Wall Street

Stock markets suffered a sharp drop on Friday, with the tech-heavy Nasdaq index seeing its biggest one-day drop since April 2025.

With fears mounting that gains so far this year may be unsustainable, a surprisingly strong US jobs report for April sparked a selloff, with the major US markets ending the week in the red.

The data stoked fresh fears among investors that the Federal Reserve will keep interest rates higher for longer, especially as inflation remains stubborn.

The Nasdaq index fell by more than 4%, the S&P 500 closed 2.6% lower and the Dow Jones Industrial Average dropped 1.35%.

Digital assets also suffered a sharp selloff on Friday. Bitcoin, the biggest cryptocurrency, dropped sharply as investors rushed to offload riskier assets across the board.

While a strong jobs market is usually good news for the economy, it means the Federal Reserve is less likely to cut borrowing costs anytime soon.

David Doyle, head of economics at Macquarie Group, said Friday's jobs report was potentially "too good", especially against a backdrop of high inflation.

He said the figures raised the likelihood the Federal Reserve will raise interest rates this year, contributing to the stock market selloff.

It meant investors who had been holding out for rate cuts were forced to quickly change their plans.

However, Friday's selloff did not mark a global market panic. Instead, it saw investors shifting away from tech stocks, which critics have warned are overvalued and could crash in the same way as the dotcom bubble in the early 2000s.

Major investment funds pulled money out of AI and microchip companies, which have seen their share prices soar in recent years.

Instead of leaving the market entirely, investors piled instead into traditionally safer investments. Sectors such as healthcare, utilities, and consumer staples, including Kraft Heinz and Keurig Dr Pepper, saw a boost as traders looked for stability.