Nasdaq Suffers Worst Day Since April 2025 as Chip Stocks Plunge 4%
The Nasdaq Composite dropped 4.18% on Friday, marking its biggest decline since April 2025, as chip stocks experienced a massive sell-off amid concerns about supply chains and market valuation in the AI hardware sector.
Historic Chip Sector Correction Rocks Tech Markets
U.S. equities tumbled Friday because of a violent sell-off for chip stocks, with the tech-heavy Nasdaq Composite losing 4% for its biggest decline since the tariff turmoil of early 2025. The sharp correction in semiconductor shares signals a potential turning point in investor sentiment around the AI hardware buildout that has driven much of 2026's market gains.
Catalysts Behind the Sell-Off
The catalyst for the chip turn this week was unclear, with some disappointment in Broadcom's failure to raise its AI chip outlook Wednesday night causing the group to lose ground on Thursday, but Friday's selling reached a new level of intensity. The combination of disappointing guidance and broader market pressures created a perfect storm for semiconductor equities.
Broader Market Context and Global Impact
A spike in Treasury yields following a much stronger-than-expected jobs report for May didn't help the case, with the Nasdaq losing 4.18% to close at 25,709.43 for its biggest drop going back to April 2025, while the S&P 500 dropped 2.64% to 7,383.74 and the Dow Jones Industrial Average lost 695.15 points, or 1.35%, settling at 50,866.78. The selloff was not limited to U.S. markets.
Asian Markets Feel the Ripple Effect
South Korea stocks plunged Friday, leading losses in the region, as the slump in Wall Street tech names overnight spread into Asia, with the Kospi ending Friday's session 5.54% lower at 8,160.59, with index heavyweights Samsung Electronics and SK Hynix dropping 6.40% and 9.92%, respectively. The sell-off exposed the global interconnectedness of semiconductor supply chains and the vulnerability of Asia-Pacific tech stocks to Wall Street sentiment shifts.