U.S. equities slipped from Thursday’s highs on Friday as a strong August jobs report increased the probability of a Federal Reserve rate hike. The economy added 162,000 jobs in August, nearly triple the consensus estimate, prompting traders to price in a roughly 52% chance of a 25-basis-point increase in the federal funds rate this month. In response, the S&P 500 fell 0.3% to 7,725.16, and the Dow Jones Industrial Average dropped 0.5% to 53,436.22.
Within the technology sector, a sharp rotation occurred. Memory and semiconductor stocks surged, while software and discretionary retail names suffered significant declines. SanDisk Corp. led the gains, jumping 10.3% to $1,714.87, as the NAND pricing cycle accelerated. Astera Labs Inc. surged 12% to $316.86, topping the Russell 1000. Other chipmakers, including Semtech Corp., KLA Corp., Super Micro Computer Inc., Micron Technology Inc., and Applied Materials Inc., also posted gains of 4% to 9%.
Conversely, software stocks were hit hard. Guidewire Software Inc. collapsed 21% to $160.19 after reporting fiscal fourth-quarter results that topped revenue expectations but failed to satisfy investors regarding its valuation. UiPath Inc. dropped 16.7% despite beating revenue estimates, due to a lower-than-expected third-quarter revenue guide. Fair Isaac Corp. plunged 16.6% after the Federal Housing Finance Agency Director instructed Fannie Mae and Freddie Mac to approve all lenders to use VantageScore, ending the company’s monopoly on mortgage credit scoring.
On the retail front, Lululemon Athletica Inc. crashed 17.5% to $100.49. The company reported second-quarter revenue of $2.4 billion, a 4% decline, and cut its full-year revenue guidance to $10.35 billion to $10.5 billion. Five Below Inc. was a notable exception, gaining 6.9% to $256.62, as it raised its full-year revenue guidance to $5.63 billion to $5.71 billion.
Bitcoin fell 1.8% to below $80,000, while Palantir Technologies Inc. and Coinbase Global Inc. each shed close to 4%.
