Trump stunned as stocks fall on great jobs report. Barclays explains why ‘we are entering the warning zone’

The U.S. jobs market had a fantastic May, with payroll gains nearly double what analysts expected. While economists cheered, the AI trade shriveled, sending the Nasdaq down 4%, the worst day in over a year, and the S&P down another 1.2%. The reaction confused the White House. “With a great Jobs Report, like just announced, stocks should go up, not down,”President Donald Trump posted on Truth Social Friday morning. “That’s the way it was for 200 years. Growth does not mean inflation!” Demand is running unusually hot—overall spending in the economy grew 5.9% last quarter, well above the roughly 4% pace that is consistent with the Fed’s inflation target—while the economy’s capacity to meet that demand is being short-circuited from multiple supply chain crises. The war in Iran has shut off most oil shipments through the Strait of Hormuz, sending gas prices skyrocketing. Tariffs have raised the cost of imported goods. And the labor force is slowly shrinking, partly due to the Trump administration’s immigration crackdowns. The combination of too much demand chasing too little supply is the textbook definition for inflation—and is why consumer prices have now run above the Fed’s 2% target for more than five years. It is also why growth itself has changed meaning for markets; when supply is abundant, a strong jobs report signals more output and more profits, more room to grow. When supply is constrained, it signals more spending power pressing against that same ceiling of inflation. So if the labor market is hot, it’s evidence that the Fed has no room yet to cut rates, and might in fact have to raise them. AI is at the center of the insatiable demandDriving all this is a historic appetite for capital. The AI buildout has hyperscalers on pace to spend close to a trillion dollars a year on data centers and chips. Even Alphabet, among the richest companies on earth, raised $85 billion from the stock market. The issue is eve