Stocks tumbled Friday as a selloff that began earlier in the week over fears about the AI boom’s longevity was compounded by worries about rate hikes from the Federal Reserve.

The Nasdaq sank 4%, suffering its worst selloff since April 2025—during the height of President Donald Trump’s tariff shock. The S&P 500 lost 2.6%, and the Dow Jones Industrial Average fell 1.35%.

Chipmakers Micron Technology, Intel, Cisco and Nvidia led the charge lower, while hyperscalers like Meta, which will reportedly plow billions more into AI, as well as Amazon and Microsoft suffered more modest declines.

Trouble began when chip designer Broadcom gave disappointing guidance late Wednesday, when it reported quarterly earnings. That sparked a selloff on Thursday that got further stoked by Friday’s strong jobs report.

The Labor Department’s monthly tally showed employers added a net 172,000 jobs last month, nearly double Wall Street forecasts. Prior months were also revised sharply higher, indicating the labor market was much more resilient than previously thought in the face of higher oil prices caused by the Iran war.

With the employment picture looking steadier, the Fed is expected to focus more on fighting inflation, which has exceeded the central bank’s 2% target for five years.

Investors priced in a greater probability of tighter monetary policy, giving up on the prospect of additional rate cuts anytime soon.

The yield on the 10-year Treasury jumped 5.5 basis points on Friday to 4.532%. That came despite a drop in oil prices, which had previously driven yields up.

Still, some analysts on Wall Street held out some hope that the central bank would remain on hold and keep rates unchanged, rather than send them back up.

Christopher Hodge, chief U.S. economist at institutional brokerage firm Natixis CIB Americas, said in a note that the bar to hike rates is still high, citing subdued wage gains, high productivity, and inflation expectations that remain anchored.

“The lack of a re-acceleration of wage growth in recent months points to a labor market that is stable, but not hot,” he wrote. “This distinction matters. A jobs market that is faltering requires policymakers to consider coming to the rescue with cuts—clearly not the case now. A job market that is thriving and increasingly tighter might require hikes—but we don’t think we are there yet either. Instead, this is a goldilocks labor market that is on firm footing, but without adding an inflationary impulse.”

This story was originally featured on Fortune.com