Nasdaq suffers biggest drop since April 2025 as chip stocks lead selloff

U.S. stock markets experienced their worst decline in months on Friday, with the Nasdaq Composite Index plummeting 4.18%—its largest one-day percentage loss since April 2025. The selloff was driven primarily by tech and semiconductor stocks, which had surged in recent weeks, with the Philadelphia SE Semiconductor Index suffering its steepest drop since March 2020. The downturn erased over $1 trillion in market value as fears of a Federal Reserve policy pivot grew following a stronger-than-expected May jobs report. The Labor Department reported the U.S. economy added 172,000 jobs in May, far exceeding analyst expectations, while the unemployment rate remained steady at 4.3%. This robust data dashed hopes for near-term interest rate cuts, with markets now pricing in a 42.7% chance of a rate hike by December, according to CME’s FedWatch tool. Investors reacted sharply, with the Nasdaq, S&P 500, and Dow Jones Industrial Average all closing lower, down 4.18%, 2.64%, and 1.35%, respectively. Tech stocks bore the brunt of the losses, with the sector falling 5.8% in the S&P 500. Nvidia, the world’s largest company by market value, dropped 6.2%, while Intel, Micron, AMD, and Broadcom declined between 7.9% and 13.3%. Lululemon Athletica also slumped 8.6% after cutting its annual profit forecast, though Cooper Companies rose 7.5% following strong second-quarter results. Cryptocurrency firms Coinbase and Strategy fell 7.1% and 6.9%, respectively, amid a 4.1% drop in Bitcoin. Analysts attributed the selloff to overbought positioning rather than fundamental concerns, though rising geopolitical tensions—including escalating conflicts in the Middle East—added to market jitters. Iran’s continued support for Hezbollah and demands for Israel’s withdrawal from southern Lebanon further complicated hopes for a peace deal that could stabilize energy prices. Meanwhile, S&P Global confirmed it would not alter eligibility requirements for its major indices, effectively blocking SpaceX’s potential entry into the S&P 500 after its planned IPO. Despite the sharp decline, some strategists argued the selloff did not signal the end of the semiconductor bull market. Ryan Detrick of Carson Group noted the market’s reaction reflected positioning rather than long-term fundamentals, while Wells Fargo’s Ohsung Kwon suggested the sector remained strong despite short-term volatility. The broader market’s nine-week winning streak ended, however, as investors digested the implications of the jobs report and persistent geopolitical risks.