Archer Aviation shares fell more than 10% on Friday after the May jobs report showed the U.S. economy added 172,000 jobs, more than double the consensus estimate. The stronger-than-expected data reinforced expectations that the Federal Reserve will keep interest rates elevated, pressuring high-growth, pre-revenue stocks that are most sensitive to borrowing costs.
Growth stocks sold off Friday after a stronger-than-expected May jobs report reinforced expectations that the Federal Reserve will keep interest rates elevated, with Archer Aviation falling more than 10% in a broad rotation out of speculative names.
"The hot jobs number takes any near-term rate cut off the table, and that's a direct headwind for high-duration equities like Archer that need cheap capital to fund their path to profitability," said Mark Luschini, chief investment strategist at Janney Montgomery Scott.
Nonfarm payrolls rose by 172,000 in May, more than double the 80,000 consensus estimate, while the unemployment rate held steady at 4.3%, the Bureau of Labor Statistics reported Friday. The government also revised March and April hiring figures higher by a combined 93,000 jobs, with April's gain now at 179,000. The 10-year Treasury yield surged to 4.534%, its highest level since May 21, as traders repriced the likelihood of Fed easing this year. The Nasdaq and S&P 500 were set to open lower, extending a tech selloff that spread to Asian and European markets overnight.
Job gains were concentrated in leisure and hospitality, which added 70,000 positions, local government, which added 55,000, and health care, which added 35,000. Financial activities was one of the few weak spots, shedding 22,000 jobs during the month. Average hourly earnings rose 0.3% from April and were up 3.4% from a year earlier, matching economists' expectations. The unemployment rate has now remained in a range between 4.3% and 4.5% since July 2025, a sign the labor market is resilient but not overheating.
The selloff in growth stocks was broad-based, with the tech-heavy Nasdaq leading declines as investors repriced the probability of rate cuts. The rotation out of high-duration names pushed Treasury yields higher, with the two-year yield also climbing as the front end of the curve repriced Fed expectations. The U.S. dollar strengthened against major currencies, adding pressure on commodities and emerging market equities.
Archer Aviation, which has yet to generate meaningful revenue from its electric vertical takeoff and landing aircraft, is among the most rate-sensitive names in the market. Higher-for-longer interest rates increase the discount rate applied to the company's future cash flows, compressing valuations across the pre-revenue growth stock universe. The selloff in Archer echoed declines across the broader EV and aviation sector, with peers also under pressure as investors rotated toward value and defensive names.
The May jobs data marked the latest in a series of labor market reports that have consistently exceeded expectations, giving Fed officials cover to maintain their wait-and-see approach to monetary policy. Central bank policymakers lowered benchmark rates by three-quarters of a percentage point during the latter part of 2025 but have held steady this year as inflation remains above target. Broader economic growth has been solid, with gross domestic product rising at a 1.6% annualized rate in the first quarter and tracking at a 3% gain in the second quarter, according to the Atlanta Fed. The next Fed meeting is scheduled for later this month, with traders now assigning a lower probability to a rate cut.
For Archer Aviation, the path to profitability depends on commercializing its eVTOL aircraft and securing regulatory approvals, both of which require sustained capital investment. In a higher-rate environment, the cost of that capital rises, pushing expected returns further into the future and weighing on the stock's valuation. The company's double-digit decline Friday reflects investors repricing those risks in real time.
This article is for informational purposes only and does not constitute investment advice.
