Tech Stock Market Sell-Off: Nasdaq Plunges 4% as Chip Stocks Fall
The Nasdaq Composite tumbled 4% on Friday for its biggest decline since April 2025, driven by a violent sell-off in chip stocks following disappointing earnings guidance and a stronger-than-expected jobs report that raised Treasury yields.
Market Decline
The Nasdaq lost 4.18% and closed at 25,709.43 for its biggest drop going back to April 2025. The S&P 500 dropped 2.64% and ended at 7,383.74, while the Dow Jones Industrial Average lost 695.15 points, or 1.35%, settling at 50,866.78. The tech-heavy Nasdaq Composite lost 4% for its biggest decline since the tariff turmoil of early 2025.
Catalyst: Chip Sector Weakness
The catalyst for the chip turn this week was unclear. Some disappointment in Broadcom's failure to raise its AI chip outlook Wednesday night caused the group to lose ground on Thursday. Dutch semiconductor mainstay ASML was last seen 3.8% lower, while German chipmaker Infineon Technology slumped more than 6% in morning trade.
Broader Economic Pressures
A spike in Treasury yields following a much stronger-than-expected jobs report for May didn't help the case. Economists think one potential driver of the outsized gain in May payrolls was the upcoming World Cup event in the U.S. Several firms mentioned the soccer tournament, which starts June 11, as one source for the surprisingly strong gain of 172,000 for the month, which defied the consensus for just 80,000.
Global Impact
South Korea stocks plunged Friday, leading losses in the region, as the slump in Wall Street tech names overnight spread into Asia, dragging benchmark indexes lower. The Kospi ended Friday's session 5.54% lower at 8,160.59. Index heavyweights Samsung Electronics and SK Hynix dropped 6.40% and 9.92%, respectively.
Nvidia Resilience Narrative
Nvidia thinks its addressable market can double as new versions of its chips come into the fold, according to comments by CFO Colette Kress at the Bank of America Global Technology Conference. The bank reiterated its buy rating on the chipmaker and $350 price target after Kress' keynote address.