Key Takeaways
- The Nasdaq Composite (^IXIC) plummeted 4.00%, or 1,072.37 points, marking its steepest single-day decline since October as a massive sell-off in technology and semiconductor shares erased over $1 trillion in market value.
- U.S. bank deposits climbed to $19.333 trillion from $19.285 trillion the previous week, according to the Federal Reserve’s H.8 release, suggesting a flight to liquidity amid heightened market volatility.
- Bank of England Governor Andrew Bailey warned that AI innovation will take time to impact economic growth, cautioning that current market valuations may be overly optimistic as "everyone is currently priced to be a winner."
- S&P Global affirmed Sweden’s 'AAA/A-1+' sovereign credit rating with a stable outlook, citing the nation's resilient economy and strong fiscal headroom despite increased defense spending.
- Nearly 1,000 commercial ships crossed the Strait of Hormuz over the last two months, according to U.S. Central Command, indicating continued maritime flow despite ongoing regional tensions and blockades.
Tech Sell-off Drags Wall Street Lower
U.S. equity markets faced a brutal session on Friday as the Nasdaq Composite (^IXIC) unofficially closed down 4.00% at 25,758.58. The S&P 500 (^GSPC) followed suit, dropping 2.55% to 7,390.59, while the Dow Jones Industrial Average (^DJI) shed 1.22% to end at 50,933.18.
The rout was fueled by a stronger-than-expected May jobs report, which showed 172,000 jobs added, nearly double analyst expectations. This robust data effectively eliminated hopes for a Federal Reserve rate cut, with markets now pricing in a 60-70% chance of a rate hike by year-end to combat persistent inflation.
Heavyweight technology names led the decline, with Nvidia (NVDA) falling 6.3% and Broadcom (AVGO) dropping 7.6%. Meta (META) shares slid 6% to 7% following reports that the company may seek a multi-billion dollar secondary stock offering to fund its massive AI infrastructure investments.
Banking Sector Sees Deposit Growth
Despite the turmoil in equity markets, the U.S. banking system saw a notable increase in liquidity. Total U.S. bank deposits rose to $19.333 trillion, up from $19.285 trillion the prior week, according to the Federal Reserve's weekly H.8 release on the assets and liabilities of commercial banks.
This $48 billion weekly increase suggests that investors may be rotating out of riskier assets and into the relative safety of cash and bank deposits. Analysts noted that while the broader market struggled, the banking sector remains well-capitalized, with domestic deposits showing steady growth through the first half of 2026.
BOE Governor Tempers AI Expectations
Bank of England Governor Andrew Bailey provided a sobering perspective on the artificial intelligence boom during a speech on Friday. Bailey noted that while AI is a "general-purpose technology," history shows that innovation takes significant time to affect productivity and growth.
Bailey specifically cautioned against the current "hype" surrounding AI valuations, stating that stock markets may be miscalculating future earnings flows. "To assume that all companies today are profitable in the long run is not in line with the facts of history," Bailey remarked, adding that many early internet pioneers did not survive the long term.
Global Macro and Geopolitical Updates
In sovereign credit news, S&P Global affirmed Sweden's 'AAA/A-1+' rating with a stable outlook. The agency expects Sweden's economic growth to reach 2.1% this year, supported by strong military exports and a long-term plan to expand nuclear power generation, which offsets the impact of rising general government debt.
In the Middle East, U.S. Forces reported that nearly 1,000 commercial vessels have transited the Strait of Hormuz in the last two months. While this figure is higher than private sector estimates, it highlights the continued use of "dark" transits—where ships disable transponders—to maintain global energy flows through the contested waterway.
Finally, President Trump held an American Agriculture Roundtable in Chippewa Falls, Wisconsin, focusing on the dairy industry and rural economic policy. The President discussed plans to lower input costs and expand export markets for Wisconsin farmers, emphasizing the importance of the agricultural safety net as the 2026 midterm election season approaches.
Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications.