When I was a physics undergrad student, I remember being told by advisors that a Master's was considered to be a booby prize. We were told that grad programs would only consider students who indicated an interest in a PhD.

One possible reason is that grad student funding was limited, and they didn't want to waste it on students who weren't going to contribute to research. All physics grad students were fully funded. I'm not sure this is true today.

So far as I could tell, this was strictly limited to physics. My graduate program was almost exclusively PhD students, and the terminal Master's was used as an escape hatch. On the other hand, those students did just fine in the job market, so it could be just a peculiarity of the academic culture that is not reflected outside of the academe.

Working in industry after my degree, I encountered people with Masters in physics, who were doing just fine, and they did not strike me as inferior -- they just didn't want to stay for a PhD.