Broadcom's Plunge Takes a Chip Out of Long Rally

June 4, 2026 Joe Mazzola
A double-digit plunge in Broadcom on disappointment around its earnings clipped the tech market today, but consumer stocks rose as oil and yields dipped. Jobs data looms Friday.

Published as of: June 4, 2026, 9:14 a.m. ET

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(Thursday market open) Chip stocks finally hit a speed bump early today, and much of Wall Street pressed the brakes on its extended rally. Results from chip giant Broadcom (AVGO) that sent its shares tumbling double digits set the stage for Thursday's weakness, while cybersecurity firm Crowdstrike's (CRWD) post-earnings plunge added to bearish sentiment. On one positive note, consumer-oriented stocks rose as oil and yields slipped after Israel and Lebanon agreed to a ceasefire.

With May nonfarm payrolls ahead at 8:30 a.m. ET Friday, some selling might represent consolidation. Analysts think the economy created 85,000 jobs, historically light and down from 115,000 in April. Still, it would be the third straight month of job gains for the first time in a year, and less job growth is needed these days to match the supply of workers. Unemployment is expected to stay at 4.3%. Speaking of which, weekly initial jobless claims hit 225,000—a three-month high—up from the prior week's 215,000. And May job cuts rose to 97,000 from around 83,000 in April, according to Challenger, Gray & Christmas.

Major indexes fell sharply Wednesday as oil and yields rose amid escalation in the Persian Gulf. Small-caps and tech both fared poorly, though five of 11 S&P 500 sectors gained. Most of the green sectors were defensive ones. "A more sustainable broadening out of market performance … would likely require an end to the war and a 'permanent' reopening of the Strait of Hormuz," wrote Liz Ann Sonders, chief investment strategist at the Schwab Center for Financial Research (SCFR) and Kevin Gordon, head of macro research and strategy at SCFR, in their mid-year outlook.

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Three things to watch

  1. Chips get chopped: The bar appears lofty for chips with share prices up dramatically from two months ago. Broadcom toppled 15% before the open. It narrowly beat fiscal second quarter earnings and revenue consensus compiled by FactSet but fell just short of the revenue consensus from LSEG. Broadcom expects semiconductor revenue from AI to grow more than 200% annually in the current quarter. It guided for third quarter revenue of $29.4 billion, well above FactSet's consensus view, but apparently disappointing investors. CrowdStrike suffered 9% early losses following its earnings late Wednesday. Results narrowly beat analysts' estimates, and guidance for second quarter revenue was above estimates. Fiscal year guidance also topped consensus and the company announced a four-for-one stock split. "CrowdStrike is AI security infrastructure, critical to successful AI adoption," the company said in a press release, apparently aiming to blunt concerns that AI could replace its business model.
     
  2. Top stocks show signs of fraying: S&P 500 tech names are up more than 17% over the past month, which probably won't surprise. At the same time, however, the so-called "Magnificent Seven" are down slightly. Amazon (AMZN), Alphabet (GOOGL), Meta (META), and Tesla (TSLA) are all off their spring peaks, though Nvidia (NVDA), Microsoft (MSFT), and Apple (AAPL) recently posted new highs. This reinforces a trend where individual stock volatility keeps rising even as volatility in the overall market remains relatively low. "There's more of a fraying of names, and stocks aren't moving as a monolith," my colleague Gordon told CNBC this week. At the same time, he noted signs of froth, including the recent rally in non-profitable tech stocks and heavily shorted names, which resembles action emerging from the pandemic in late 2021. "In a behavioral sense, more greed is showing up," Gordon added. "It all sends more worrisome signals that there could be an air pocket not very far above us."
     
  3. Unblocked strait no panacea for crude costs: More than 100 days into the war, 170 ships remain locked in the Persian Gulf. Reopening the Strait of Hormuz won't magically get things back to normal for the oil market. "Even in a more constructive scenario where there's an obvious resolution in the Middle East, we still don't think oil prices would necessarily move sustainably lower right away," said Cooper Howard, director of fixed income research and strategy at SCFR. "It takes time to restore production." In addition to the time it would take for ships stuck to pass through the Strait of Hormuz, assuming it's safe, it would then take time for new ships to enter the Gulf to pick up oil and other commodities waiting at ports. Speaking of which, missiles damaged many Persian Gulf crude and liquid natural gas installations, which could take months or years to repair and add another piece to the puzzle. About 15 million barrels of oil a day have disappeared from supply, The Wall Street Journal noted, and inventories are shrinking. It'd take up to six months to return to 80% of precrisis supply, The Journal said, citing S&P Global, meaning it's unlikely U.S. crude prices would drop anywhere near the $65 per barrel level they were before the war.

Crypto currents

Bitcoin's very bad two weeks: It's been brutal for bitcoin lately. A 16% drop over 13 days. As of Monday, more than $3 billion in net withdrawals from spot exchange-traded products (ETP) across 13 straight days of net outflows—a record—according to Glassnode data. Adding insult to injury, at least for crypto evangelists: The apparent defiance of gravity by AI-related stocks, which have sucked the oxygen out of the room as well as, perhaps, money out of ETPs. Now, more than six months into the current bear market, the Crypto Fear & Greed Index is flashing "extreme fear." But perhaps the worst is almost over. Bitcoin will likely find support around $60,000, a level which roughly coincides with the cost of production for efficient miners and the 200-week moving average, said Jim Ferraioli, director of digital currencies research and strategy at SCFR. Those levels have provided support in all past bear markets, including in February this year, Ferraioli said. Bitcoin (/BTC) futures dove another 4% this morning, to below $63,000 and not far from February's low of $60,000. Crypto-related stocks Strategy (MSTR) and Coinbase (COIN) each lost 1% or more.

Bitcoin's very bad two weeks: It's been brutal for bitcoin lately. A 16% drop over 13 days. As of Monday, more than $3 billion in net withdrawals from spot exchange-traded products (ETP) across 13 straight days of net outflows—a record—according to Glassnode data. Adding insult to injury, at least for crypto evangelists: The apparent defiance of gravity by AI-related stocks, which have sucked the oxygen out of the room as well as, perhaps, money out of ETPs. Now, more than six months into the current bear market, the Crypto Fear & Greed Index is flashing "extreme fear." But perhaps the worst is almost over. Bitcoin will likely find support around $60,000, a level which roughly coincides with the cost of production for efficient miners and the 200-week moving average, said Jim Ferraioli, director of digital currencies research and strategy at SCFR. Those levels have provided support in all past bear markets, including in February this year, Ferraioli said. Bitcoin (/BTC) futures dove another 4% this morning, to below $63,000 and not far from February's low of $60,000. Crypto-related stocks Strategy (MSTR) and Coinbase (COIN) each lost 1% or more.

Bitcoin (/BTC) futures dove another 4% this morning, to below $63,000 and not far from February's low of $60,000. Crypto-related stocks Strategy (MSTR) and Coinbase (COIN) each lost 1% or more.

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Bitcoin's very bad two weeks: It's been brutal for bitcoin lately. A 16% drop over 13 days. As of Monday, more than $3 billion in net withdrawals from spot exchange-traded products (ETP) across 13 straight days of net outflows—a record—according to Glassnode data. Adding insult to injury, at least for crypto evangelists: The apparent defiance of gravity by AI-related stocks, which have sucked the oxygen out of the room as well as, perhaps, money out of ETPs. Now, more than six months into the current bear market, the Crypto Fear & Greed Index is flashing "extreme fear." But perhaps the worst is almost over. Bitcoin will likely find support around $60,000, a level which roughly coincides with the cost of production for efficient miners and the 200-week moving average, said Jim Ferraioli, director of digital currencies research and strategy at SCFR. Those levels have provided support in all past bear markets, including in February this year, Ferraioli said. Bitcoin (/BTC) futures dove another 4% this morning, to below $63,000 and not far from February's low of $60,000. Crypto-related stocks Strategy (MSTR) and Coinbase (COIN) each lost 1% or more.

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Bitcoin's very bad two weeks: It's been brutal for bitcoin lately. A 16% drop over 13 days. As of Monday, more than $3 billion in net withdrawals from spot exchange-traded products (ETP) across 13 straight days of net outflows—a record—according to Glassnode data. Adding insult to injury, at least for crypto evangelists: The apparent defiance of gravity by AI-related stocks, which have sucked the oxygen out of the room as well as, perhaps, money out of ETPs. Now, more than six months into the current bear market, the Crypto Fear & Greed Index is flashing "extreme fear." But perhaps the worst is almost over. Bitcoin will likely find support around $60,000, a level which roughly coincides with the cost of production for efficient miners and the 200-week moving average, said Jim Ferraioli, director of digital currencies research and strategy at SCFR. Those levels have provided support in all past bear markets, including in February this year, Ferraioli said. Bitcoin (/BTC) futures dove another 4% this morning, to below $63,000 and not far from February's low of $60,000. Crypto-related stocks Strategy (MSTR) and Coinbase (COIN) each lost 1% or more.

On the move

  • Chip stocks, including memory giant Micron (MU), slid sharply early today in sympathy with Broadcom. Micron fell 7% and Super Micro Computer (SMCI) and Intel (INTC) fell 5% to 7% ahead of the open.
     
  • Lululemon (LULU) inched up ahead of earnings later today. Shares of lululemon recently edged up after the recent settlement of a proxy battle at the athletic apparel firm but are valued at only about one-quarter of their early 2025 peak. Weak financial results and consumer worries about the alleged presence of toxic chemicals in the company's products both weighed, Barron's noted.
     
  • Ciena (CIEN) plunged 8% even though the optical networking firm reported earnings and revenue that surpassed Wall Street's estimates. Revenue climbed 40% year over year. The company also raised guidance.
     
  • With the chips down, software stocks popped up in a pattern seen before on recent weak days for semiconductors. ServiceNow (NOW) led the way, up more than 3%, and Palantir (PLTR) also registered a 3% advance.
     
  • Private credit company stocks including Blackstone (BX) and Blue Owl (OWL) fell yesterday as concerns rose again that withdrawal requests could rise amid shakiness in the software industry, Barron's reported. This morning, Blackstone restricted withdrawals from its Blackstone Private Credit fund after investor redemption requests rose, CNBC reported.
     
  • Rate-sensitive stocks, including homebuilders KB Home (KBH), D.R. Horton (DHI), and Lennar (LEN), rose early as Treasury note yields fell after the Lebanon ceasefire announcement. Shares of some consumer-oriented firms, including cruise lines, grocers, and restaurants, also edged up.
     
  • Petco (WOOF) dropped almost 12% after earnings appeared to disappoint investors despite being mostly in-line with consensus. The company also reaffirmed guidance for fiscal 2027.
     
  • In one other data point early today, first-quarter U.S. nonfarm business sector labor productivity growth got downwardly revised to 0.3% from the prior 0.8%, well below consensus for 0.8% and down from the previous quarter's 1.6%. While one quarter isn't a trend, this could be a blow to hopes that AI is raising productivity.

More insights from Schwab

Half-time panorama: In their 2026 mid-year outlook, Schwab's Sonders and Gordon discussed challenges faced by the economy including rising energy costs, real negative wage growth, and weak savings. Earnings are driving the bull market, but leadership is narrow and concentrated in AI, while inflation remains sticky.

Half-time panorama: In their 2026 mid-year outlook, Schwab's Sonders and Gordon discussed challenges faced by the economy including rising energy costs, real negative wage growth, and weak savings. Earnings are driving the bull market, but leadership is narrow and concentrated in AI, while inflation remains sticky.

Capitol view: Check Schwab's Washington Wise podcast for an up-to-date breakdown of policy news from the Capitol that might affect Wall Street. Immigration policy is near the top of the Senate's agenda. The new podcast also features a discussion about the long market rally and whether it's sustainable.

PEG primer: Valuing stocks takes patience and hard work, but investors also need the right valuation tools. The price/earnings-to-growth ratio, or PEG ratio, is often considered one of the most valuable metrics. Learn all about it in our latest look at fundamental analysis.

401(k) contributions—how much is enough? Deciding how much to contribute to your 401(k) plan is one of the most important steps in planning for retirement. The right contribution amount depends on multiple factors, but no matter the rate, starting early and staying consistent can make a big difference.

Employee equity and IPOs—what to know: An IPO can potentially turn employee equity into a meaningful source of wealth, but it also brings new rules, timelines, and financial decisions that can be easy to underestimate. Schwab's new article outlines six key actions employees should consider when their company goes from private to public.

Chart of the day

PHLX Semiconductor Stock Index rose 22.1% from April to May. It started at almost 8,700 and is almost at 13,900. Bitcoin is down about 2% at around $66,000 from a high of almost $68,000.

Data sources: CME Group, Nasdaq. Chart source: thinkorswim® platform.

Past performance is no guarantee of future results.

For illustrative purposes only.

In April, bitcoin futures (/BTC—candlesticks) outperformed the PHLX Semiconductor Stock Index (SOX—purple line). That changed in May. Bitcoin reversed and sold off after it failed to climb above its 200-day moving average (not pictured), while the SOX, something of a proxy for the AI trade, continued to march higher.

The week ahead

June 5: May nonfarm payrolls, unemployment, and wages.
June 8: Expected earnings from Campbell's (CPB).
June 9: May existing home sales and expected earnings from J.M. Smucker (SJM), Casey's General Stores (CASY), and GameStop (GME).
June 10: May CPI, May core CPI, and expected earnings from Chewy (CHWY) and Oracle (ORCL).
June 11: ECB interest rate decision, May PPI and core PPI, and expected earnings from Adobe (ADBE) and Lennar (LEN).

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