U.S. Stock Market Trend: Dow Plunges 620 Points, Broadcom Delivers Another Blow After Hours
TechFlow Selected TechFlow Selected
U.S. Stock Market Trend: Dow Plunges 620 Points, Broadcom Delivers Another Blow After Hours
If the nonfarm payroll data released on Friday is stronger than expected, U.S. Treasury yields could rise further above 4.5%, placing greater pressure on equity market valuation logic.
Navigating Web3 tides with focused insightsBy: Tide Research
Today’s Core Contradiction
Nine consecutive days of gains had nearly caused the market to forget one thing: the U.S.-Iran conflict that began three months ago remains unresolved. On June 3, Iran launched 13 ballistic missiles and 17 drones at Kuwait, severely damaging Kuwait International Airport and killing one person. The U.S. military promptly struck an Iranian military ground control station on Qeshm Island in the Strait of Hormuz. WTI crude oil surged to $96 per barrel; the 10-year U.S. Treasury yield rose accordingly; and the S&P 500’s nine-day winning streak abruptly ended.
AI can dream—but missiles wake you up.
On Wednesday, Wall Street collectively reversed course.
The Dow Jones Industrial Average plunged 620.72 points (–1.21%) to 50,687.07—the steepest decline among major indices that day. The S&P 500 fell 0.74% to 7,553.68, ending its nine-day rally that had begun on May 21—the longest such streak since late 2024. The Nasdaq dropped 0.89% to 26,853.98, while the Russell 2000 fell 1.25%, once again proving itself the most sensitive barometer of risk sentiment.
Just one day earlier, all three major indices had stood at record highs.
Mideast Conflict Reignites; Oil Fuels Inflation Expectations
Tuesday’s sell-off had a very specific trigger: Iran’s large-scale overnight air assault on Kuwait.
Kuwaiti military authorities confirmed Iran launched 13 ballistic missiles and 17 drones, severely damaging Kuwait’s main international airport and killing one person. The Islamic Revolutionary Guard Corps (IRGC) later claimed responsibility for strikes against the U.S. Fifth Fleet headquarters and “U.S. military facilities in another country,” without explicitly naming Kuwait. The IRGC stated the action was retaliation for the U.S. military’s strike on Qeshm Island.
For its part, U.S. Central Command announced a precision strike on an Iranian military ground control station located on Qeshm Island—a strategic node near the entrance to the Strait of Hormuz where Iran threatens commercial shipping.
That same day, former President Trump stated, “Iran has agreed not to develop nuclear weapons”—but immediately added, “They could change their minds.” Later that day, the U.S. House of Representatives passed a War Powers Resolution requiring an end to U.S. military operations against Iran—a symbolic rebuke of Trump’s handling of the conflict.
JPMorgan noted in its research report that accelerated depletion of oil inventories would “ultimately force the Strait of Hormuz to reopen—by whatever means necessary,” and projected the strait could resume navigation by June. Yet for traders, the word “could” isn’t enough.
The immediate Mideast impact: WTI crude closed up 2.41% at $96.02 per barrel; Brent crude rose 1.89% to $97.81 per barrel.
Rising oil prices triggered a chain reaction: inflation expectations rose → odds of a Fed rate hike by year-end remained above 60% → the 10-year U.S. Treasury yield climbed further → high-valuation growth stocks came under pressure. This transmission mechanism has played out repeatedly over the past three months—but during May’s AI-fueled euphoria, markets selectively ignored it. On June 3, reality delivered the bill.
The VIX Volatility Index jumped noticeably from the prior day’s 15–16 range, ending nearly two weeks of low-level trading. The fear gauge began breathing again—signaling renewed demand for hedges.
Sector-Wide Pressure: Communication Services, Financials, and Tech Lead Declines
Almost all 11 sectors within the S&P 500 posted losses.
The Communication Services sector remained the week’s weakest: Alphabet continued to feel pressure from the previous day’s announcement of an $80 billion share issuance (–0.67%). Microsoft plunged 3.28%, dragging down the broader tech sector. Financial stocks, meanwhile, displayed clear hesitation amid rising interest-rate expectations—even as they awaited Friday’s nonfarm payrolls data.
The Software sector fell 2.43% overall. Palo Alto Networks (PANW), which had surged 8% after hours the prior day, was sold off at open and closed down 4.37%—despite reporting earnings that beat expectations. This pattern itself signals a shift in market behavior: from “buy the rumor” to “sell the news.”
The Energy sector was likely among the few to post gains, benefiting directly from the oil price surge. Even so, market breadth was extremely narrow—not a day of “sector rotation,” but of “broad retreat.”
Broadcom After-Hours: Record AI Revenue, Yet Market Unimpressed
The real headline after Tuesday’s close was Broadcom’s (AVGO) Q2 earnings.
The numbers themselves were solid: total revenue of $22.2 billion, up 48% year-on-year—sharply accelerating from Q1’s 29% growth; adjusted EPS of $2.44, exceeding Wall Street’s consensus estimate of $2.40; AI semiconductor revenue of $10.8 billion, up 143% year-on-year and a new record—marking the 13th consecutive quarter of AI-driven growth; free cash flow of $10.26 billion, representing 46% of revenue. CEO Hock Tan guided Q3 revenue at $29.4 billion, with AI chip revenue expected to exceed $16 billion—up over 200% year-on-year.
Yet Broadcom plunged over 8% in after-hours trading and was down roughly 5% as of this writing. The market’s concerns centered on two points:
First, total revenue of $22.187 billion slightly missed the consensus expectation of $22.27 billion—a gap of less than $100 million, or under 0.4%. But for a stock trading at an 87x P/E ratio and up 13.6% over five trading days, margin for error is virtually zero.
Second, Infrastructure Software revenue—including VMware—came in at $7.178 billion, below the $7.32 billion consensus. This segment represents the strategic core of Broadcom’s $69 billion acquisition of VMware in 2023, and investors hold distinct growth expectations for it.
This was a textbook case of “buy the rumor, sell the news.” Broadcom’s AI business growth is impeccable—but when a stock rises 13.6% in the five days before earnings, all good news is already priced in. Any minor miss—even down to the decimal point—becomes grounds for selling.
CrowdStrike: Results Beat Broadly; Announces Stock Split
Also reporting after hours, CrowdStrike (CRWD) delivered strong results: FY2027 Q1 revenue of $1.39 billion (+26%), EPS of $1.10—well above the $0.88 consensus. Net new ARR reached $256 million (+32%), a quarterly record.
Management also announced a 4:1 stock split, with the record date set for June 25 and trading at the split-adjusted price beginning July 2. CEO George Kurtz described the quarter as “the moment where cybersecurity meets frontier AI,” declaring CrowdStrike the “AI security infrastructure.”
Following last year’s global outage incident, CrowdStrike has proven its resilience through several consecutive quarters of strong performance. The stock-split decision sends a clear signal: management is confident in the stock’s long-term trajectory.
Week Ahead: Nonfarm Payrolls Will Set Market Direction
Wednesday’s ADP employment report and ISM Services PMI have already been released. Friday brings the week’s true showdown: the May nonfarm payrolls report.
In the context of persistently elevated inflation—driven largely by high oil prices—the significance of employment data goes beyond simply gauging “how healthy the economy is.” It’s about whether the Fed will be forced to raise rates. JOLTS data showed April job openings surged to 7.6 million—the highest in nearly two years and far above the 6.88 million consensus—underscoring labor-market resilience and effectively silencing dovish voices calling for rate cuts. If Friday’s nonfarm report comes in strong, the 10-year Treasury yield may push further above 4.5%, placing even greater pressure on equity valuations.
Sources: CNBC, Yahoo Finance, Bloomberg, NPR, BLS, TheStreet, JPMorgan Research. Disclaimer: This article reflects the author’s views only and does not constitute investment advice. Markets are volatile; investing involves risk.
Join TechFlow official community to stay tuned
Telegram:https://t.me/TechFlowDaily
X (Twitter):https://x.com/TechFlowPost
X (Twitter) EN:https://x.com/BlockFlow_News
@BlockFlow_News
