Stocks closed sharply lower on Friday and for the week.

AI-related names led the decline.

That was set in motion on Thursday, following Broadcom's Wednesday afternoon earnings. . Despite posting a quarterly EPS growth rate of 54.4% vs. this time last year, and a sales growth of 47.9%, and CEO Hock Tan saying that demand for AI semiconductors remains "simply insatiable," and raising Q3 revenue guidance 7.3% above expectations, it apparently wasn't enough for investors as they sank -12.59% on Thursday, and another -7.92% on Friday.

Semiconductors, and AI-linked names in general, have been on a tear. But they were due for some profit taking. We saw some of that on Thursday. And that was enough to prompt broader profit taking on Friday. Marvell fell -17%; Micron fell -13%; Advanced Micro Devices fell -11%; Intel dropped -11%; Sandisk fell -11%; and NVIDIA fell -6%, among others.

All of these stocks are still up for the year, and many spectacularly so, with MRVL up 210%; AMD up 117%; NVDA up 10%; AVGO up 12%; SNDK up 556%; and INTC up 169%.

Ironically, Friday's stronger-than-expected Employment Situation report didn't help. In fact, it might have exacerbated the pullback as it theoretically pushes out the timeline for the next rate cut. Nonfarm payrolls were up 172,000 (120K in the private sector and 52K in the public sector), vs. the consensus for 85,000 (90K private and -5K public). The unemployment rate remained steady at 4.3%, as expected.

The biggest job gains in May came from: Leisure and Hospitality +70,000 jobs; Local Government +55,000 jobs; Health Care +35,000 jobs; and Social Assistance jobs +12,000.

Additionally, March numbers were revised higher by +29,000 to 214K (up from 185K), with April revised higher by 64,000 to 179K (up from 115K).

Between March and May, that's an extra 180,000 more new jobs than had been expected.

Those are excellent numbers. And helps dispel fears of an economic and labor market slowdown. But it suggests, with the economy humming, and even picking up steam, it's not in need of an interest rate cut anytime soon. And gives fodder to those who think we might need to raise rates before cutting again.

We should get some insight into what the Fed is thinking on June 17^th, when the next 2-day FOMC meeting concludes, which will be helmed by new Fed Chair Kevin Warsh. Additionally, we'll get the Fed's next SEP (Summary of Economic Projections), which only comes out 4 times a year (quarterly). And it will provide outlooks for GDP, unemployment, and the Fed Funds rate, for the next 3 years.

In the meantime, we'll see if the market can regroup. Or if there's more profit taking on tap.

From their all-time high closes (some from just the previous day), the Dow is down -1.35%; the S&P 500 is down -2.97%; the Nasdaq is down -5.11%; the small-cap Russell 2000 is down -3.47%; and the mid-cap S&P 400 is down -1.92%.

Remember, pullbacks (defined as a decline between -5% and -9.99%) are very common, and they happen on average of 3-4 times a year. Every bull market has them. Could this be one of them? Time will tell.

But pullbacks are also short-lived. Since 1990, the typical pullback lasted about 28 days.

And if you know pullbacks and corrections are commonplace moves, you can instead look at them as opportunities to buy rather than places to sell.

Because I'm still expecting another double-digit gain this year, to the tune of 20% or more for the S&P 500.

See you tomorrow,