The S&P 500 set multiple record highs in the first half of the week. By Friday's close, it had shed 2.6% to 7,383.74 and ended a nine-week winning streak that had matched its longest run since 2023. The Nasdaq lost 4.18%, its worst single session since the tariff turmoil of April 2025. The VIX, which had been sitting at a four-month low of 15.18 on Thursday, spiked 28% on Friday.
Three things collided to cause it. None of them were a surprise in isolation. Together they were.
What Actually Triggered the Selloff?
Three catalysts converged this week. Broadcom's Q3 AI chip guidance of $16 billion missed the analyst consensus of $17.2 billion, and the stock fell roughly 15% across two sessions, erasing approximately $350 billion in market capitalisation across the semiconductor sector. Simultaneously, Alphabet announced an $80 billion equity raise to fund its AI infrastructure buildout, the largest in its history, sending shares down 4%. Then Friday's blowout jobs report sent Treasury yields sharply higher and reframed the entire rate narrative for the rest of 2026.
The S&P 500 had rallied 20.6% from its March 30 low to Tuesday's record high without a meaningful pullback. That context matters. Markets priced for perfection meet one bad week of catalysts and the correction is mechanical, not fundamental. Dip buyers showed up every prior time during this two-month run. Whether they show up again is the question heading into next week.
What Did Broadcom's Earnings Actually Show?
Broadcom reported record fiscal Q2 revenue of $22.2 billion, up 48% year over year. AI semiconductor revenue surged 143% to $10.8 billion. The stock still fell 15% because it held its full-year AI semiconductor forecast at $100 billion rather than raising it, and its Q3 AI chip guide of $16 billion missed the $17.2 billion analyst consensus. At a PE ratio of roughly 65x trailing earnings, a stock priced for perfection that delivers a good quarter gets punished when the guide is merely good.
The contagion was immediate. Marvell fell 16%, Micron dropped 13%, AMD and Intel lost around 11%. The Philadelphia Semiconductor Index dropped over 9% on Friday alone. For much of 2026, chips have been the only trade. When the most crowded sector cracks on a single guidance miss, the unwind is not orderly.
What Did the Jobs Report Do to Rate Expectations?
May nonfarm payrolls came in at 172,000 against a consensus of 80,000. April was revised up to 179,000 from a prior reading of 115,000. JOLTs job openings jumped to 7.618 million in April, the highest since May 2024. ISM Manufacturing hit 54.0, its highest reading since May 2022. Collectively, this data shifted rate expectations not just away from cuts but toward hikes: the probability of a rate increase at the October FOMC meeting jumped from 31.5% to 66.2% in a single session. The 2-year Treasury yield pushed to a 52-week high. The 10-year closed at 4.53%.
One caveat worth knowing: several economists flagged that the outsized May payrolls number may partly reflect World Cup hiring, with the tournament starting June 11 in the US. If that is a one-time boost rather than a structural signal, the Fed's read of the data matters more than the headline print. Chair Kevin Warsh's dot plot on June 17 will tell you exactly how they are interpreting it.
Why Is the Alphabet Equity Raise Significant?
Alphabet raising $80 billion in new equity to fund AI infrastructure is notable for two reasons. First, it is the largest equity issuance in the company's history. Second, the hyperscalers have historically used debt, not equity, to fund capital spending. Alphabet's shift to equity financing, following Berkshire Hathaway committing $10 billion to the raise, signals either that the company sees its stock as fairly valued currency or that debt capacity is being preserved for something else. Meta was separately reported to be considering its own multi-billion dollar equity offering for AI purposes.
If the largest tech companies are raising equity rather than debt to fund AI capex, the implication for existing shareholders is dilution. That is a structural headwind to the AI trade that was not present three months ago.
What Are the Key Catalysts Next Week?
Five events define the next seven trading days: Apple WWDC on Monday June 9, where markets will look for AI announcements that justify the stock's valuation after its strong run; May CPI on Wednesday June 10, the last major inflation print before the June 17 FOMC; SpaceX IPO listing on June 12, the largest IPO in stock market history at a $1.75 trillion valuation and $75 billion raise; PPI on Thursday June 11; and the FOMC decision with Warsh's first dot plot on June 17. CPI above 3.8% hardens the hike narrative. CPI below 3.5% reopens the cut debate.
The SpaceX dynamic is worth tracking as a market mechanic. At a $75 billion raise with 30% allocated to retail, the capital demands are significant. Some of Friday's institutional selling may have been funds raising cash ahead of the June 12 listing. Money rotating into the largest IPO in history has to come from somewhere, and that somewhere is likely existing winners in the same AI infrastructure trade.
What Does the FOMC Meeting Mean for Markets on June 17?
A hold at 3.50-3.75% on June 17 is a near-certainty at 98.7% probability. The market event is the dot plot: Warsh's first updated projections covering where Fed officials expect rates at end-2026 and beyond. A dot plot that shifts the 2026 median higher confirms the market's current hike pricing. A dot plot that holds or moves lower would be interpreted as a dovish signal despite no actual rate change. The four dissents at the April meeting, the most since 1992, mean the committee is not unified. That internal disagreement makes the dot plot harder to predict and more likely to move markets on release.
The week's position is simple to describe and hard to execute: the data is pointing toward hikes, the market's prior trajectory was pointing toward cuts, and the resolution arrives in seven days.
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