Tech Sector Turbulent

Global equities finished lower last week, as a technology-led sell-off dragged down indices on Friday. A disappointing earnings report from chipmaker Broadcom as well as a repricing in US rate expectations were the culprits for the S&P 500’s first weekly loss since March.

On the data front, US nonfarm payrolls and unemployment were the headline releases. Nonfarm payrolls beat forecasts on Friday as the US economy added 172,000 jobs in May, while the unemployment rate remained unchanged at 4.3%. This was the third consecutive month of strong job gains in the US, leading bond markets to tilt expectations towards interest rate hikes rather than cuts amid rising inflation. The Institute for Supply Management (ISM) published its Purchasing Managers’ Index (PMI) surveys in the US during the week, reporting an increase in both manufacturing and services activity. PMI surveys were also released by S&P Global for the UK manufacturing sector, showing an improvement in activity during May. Further afield, the Reserve Bank of India convened and left rates unchanged, as expected.

Last week's highlights

	ISM Manufacturing PMI (01/06) – Increased to 54, ahead of consensus ISM Services PMI (03/06) – Increased to 54.5, ahead of consensus Nonfarm Payrolls (05/06) – 172,000 jobs added in May, ahead of consensus
	Eurozone Preliminary May CPI (02/06) – Up to 3.2% in May from 3.0% in April
	S&P Global Manufacturing PMI (01/06) – Improved to 53.9 in May from 53.7 in April
	Reserve Bank of India Meeting (05/06) – Left rates unchanged, as expected

This week, inflation measures will be released for both the consumer and producer in the US. Alongside an improving labour market, further evidence of accelerating inflation in the US could reinforce rate hike expectations. In Europe, the European Central Bank (ECB) will be meeting on Thursday with a rate hike expected. Elsewhere, in Japan, May’s Producer Price Index (PPI) will be published.

What's on the radar

	US CPI Inflation (10/06) US PPI Inflation (11/06)
	European Central Bank Meeting (11/06)
	UK Gross Domestic Product (12/06)
	China Balance of Trade (08/06) Japan PPI Inflation (10/06)

Chart of the moment - Closing the gap

Source: Bloomberg, June 5th 2026. S&P 500 earnings yield based on 12M earnings.

• In recent years, the S&P 500 earnings yield has declined as valuations have risen across the index. 
• At the same time, US Treasury yields have moved higher, initially driven by the hiking cycle in 2022 and more recently by renewed inflation risks stemming from the conflict in the Middle East.
• As a result, this metric indicates that the premium available to investors for investing in equities over bonds is near its lowest level in 20 years, suggesting equity valuations are rich relative to bonds.