By Logan Gilland, CFP®
Stock indices fell significantly on Friday. The S&P 500 fell 2.6% and the Dow dropped nearly 700 points while the tech heavy Nasdaq 100 was down around 4% on the day and had its worst day since April 2025. The punch to the gut feeling that can come with a day like that is normal, but we must put it into context.
This week I was shocked to see the Myles Garrett trade. The Cleveland Browns shipped one of the best defensive ends in football to the Los Angeles Rams, a team already built to compete for a Super Bowl, and overnight the Rams’ Super Bowl odds jumped from about 11% to 15%. One player. One announcement. The whole calculus changed before a single snap.
That is how markets often work. The stock market is not just a scoreboard for corporate earnings, it is a live reading of what people believe could happen in the future. Similar to how Vegas adjusts the moment an injury report drops or a blockbuster trade gets announced, stock prices often move the moment investors update their expectations.
From the March lows to earlier this week, the Nasdaq had climbed more than 30%. And if you looked at what companies were driving that move, it was narrow. Technology, specifically AI-related names, was doing most of the heavy lifting. I mentioned this in my video last week. When a rally is built on one segment, the whole index becomes dependent on that segment staying healthy. The Rams are dangerous because of Myles Garrett (new Defensive Lineman), Matthew Stafford (their QB), and Puka Nacua (Wide Receiver). Take one of them off the field and the odds shift immediately.
The first trigger this week was Broadcom. After reporting earnings Wednesday with chip sales below expectations, semiconductor stocks led the market lower on Thursday and Friday. The equivalent of the star quarterback showing up to Thursday practice in a walking boot. Then the jobs report hit and made a bad day worse Friday. The economy added 176,000 jobs in May, more than double the 80,000 economists were expecting. That typically sounds like good news. However, a strong labor market means the Fed may have no reason to cut rates anytime soon. With a print like this, a rate increase before year end is no longer off the table. Higher rates for longer is not what investors were wanting to hear on the tail end of a poor AI company earnings report.
Markets can typically take the staircase up and the elevator down. That is what Friday looked like. We have seen days like this before and technology has often bounced back quickly. That said, market conditions remain uncertain, and future outcomes cannot be predicted. The AI trade has started to feel exuberant, and anytime we see that we tend to get on our guard. We are watching the evolution of this closely to assess whether this is the pullback that could have legs or just an ugly day.
One bad injury report does not change the roster entirely. It just means the odds get recalibrated and that is exactly what markets are supposed to do. Days like this are all part of investing.
Talk again soon.