TORONTO — Canadian and U.S. stock markets fell on Friday, as tech stocks plummeted and employment data spurred fears of higher interest rates.

Mona Mahajan, head of investment strategy at Edward Jones, said stock markets fell on a combination of two factors.

“We’re seeing a pretty dramatic sell-off in the U.S. semiconductor index in particular. Obviously, that index has had a parabolic move higher. Semiconductors have been really the star of the AI story since the start of the year and certainly over the last few weeks in particular,” she said.

Tech stocks dragged the broader market lower as companies that had powered the S&P 500 to a series of records the past two months saw losses. Nvidia fell 6.2 per cent, Broadcom dropped 7.9 per cent and Micron Technology slid 13.3 per cent for the biggest loss among stocks in that index, which was down 200.57 points or 2.6 per cent overall. The S&P 500 closed the day at 7,383.74.

Also in New York, the Dow Jones industrial average was down 695.15 points at 50,866.78, while the tech-heavy Nasdaq was down 1,121.53 points or 4.1 per cent at 25,709.43.

The U.S. stock market had its worst day since October on Friday.

And in Toronto, the S&P/TSX composite index was down 803.61 points, or 2.3 per cent, at 34,413.45.

Mahajan said the other factor is that jobs data came out better than expected in Canada and the U.S. on Friday. The reports, she said, will have “some implications on how the central banks may react.”

“But the silver lining to us is that … unemployment remains steady, the consumer probably still feels relatively healthy given a steady labour market and we haven’t seen signs of a wage price spiral with wage gains being relatively contained,” Mahajan said.

Bond yields jumped after a report showed the U.S. added a surprising 172,000 jobs in May, according to the U.S. Labor Department. Longer-term, the market sees a better than 60 per cent chance the U.S. Federal Reserve will push rates higher by the end of the year, according to CME FedWatch, and little to no chance of a cut.

Statistics Canada said Friday that the labour market rebounded with a gain of 88,000 jobs in May. The agency said the unemployment rate fell to 6.6 per cent in May, down from 6.9 per cent in April.

Separately, Wall Street has been anticipating that negotiations to end the U.S. war with Iran will eventually be successful. American and Iranian negotiators reached a tentative deal last week to extend their ceasefire, but the agreement has not been finalized.

“The geopolitical uncertainty is an overhang, but what’s interesting is markets of course are forward-looking and we have a good sense of how they’re viewing the world looking forward,” Mahajan said.

“If you look at the WTI oil futures curve, for example, (it is) pricing in high US$70 per barrel oil prices by year’s end, so really implying that there’s some mean reversion coming in oil prices.”

The price of Brent crude, the international standard, fell two per cent to settle at US$93.09.

The July crude oil contract was down US$2.50 at US$90.54 per barrel.

On the TSX, the basic materials sector led the overall index lower, which Mahajan said was weighed down by a sell-off in gold prices.

The August gold contract was down US$139.70 at US$4,365.30 an ounce.

The Canadian dollar traded for 71.82 cents US compared with 71.96 cents US on Thursday.

This report by The Canadian Press was first published June 5, 2026.

— With files from The Associated Press.

Companies in this story: (TSX:GSPTSE, TSX:CADUSD)

Daniel Johnson, The Canadian Press