Stocks fall sharply as strong jobs data fuels rate hike bets; oil set for weekly gain

NEW YORK, June 5 (Reuters) - Shares fell sharply on Friday after a blowout jobs report fueled bets of a rate hike by the U.S. Federal Reserve and as investors turned defensive ahead of the weekend, ‌wary of the flare-up in Middle East hostilities.

Iran reaffirmed support for the Hezbollah militia and demanded Israel withdraw from ‌southern Lebanon, complicating efforts to end the broader conflict between the U.S. and Iran. Israel has said it would not withdraw troops from Lebanon.

On Wall Street, all ​three indexes ended lower, led by a selloff in technology shares, including AI chipmaker Nvidia . Shares in Broadcom fell nearly 8%, continuing losses since the semiconductor company reported underwhelming results on Wednesday.

The Dow Jones Industrial Average fell 1.4%, the S&P 500 lost 2.64% and the Nasdaq Composite dipped 4.2%.

Data showed U.S. employers added far more jobs than expected in May, bolstering bets that the Fed could raise rates late ‌this year.

U.S. Treasury yields surged following the report, ⁠with the yield on the 2-year note, which typically moves in step with Fed rate expectations, hitting a 15-month high. It was last at 4.147%.

"We're talking about a strong economy," said Gary Schlossberg, market ⁠strategist at Wells Fargo Investment Institute.

"That just adds to inflation risk coming from the Gulf. It makes it difficult for the Fed to even think about rate cuts and might even increase the chances — although we're still not forecasting that yet — of a rate hike by the ​Fed before ​the end of the year against the backdrop of inflation."