U.S. stocks suffered a sharp sell-off on Friday, led by heavy losses in semiconductor shares, pushing the tech-heavy Nasdaq Composite down 4.18%—its steepest one-day decline since the market turbulence caused by tariff concerns in early 2025.
The exact trigger behind the chip sector's sudden reversal remains uncertain. Investor sentiment had already weakened after Broadcom disappointed markets by failing to raise its AI chip outlook earlier in the week. However, Friday's selling pressure intensified significantly, further fueled by a surge in Treasury yields following a stronger-than-expected U.S. jobs report.
The Nasdaq Composite closed at 25,709.43, while the S&P 500 fell 2.64% to 7,383.74. The Dow Jones Industrial Average declined 695 points, or 1.35%, ending at 50,866.78, just one day after reaching a record high.
For the week, the S&P 500 posted its first weekly loss in ten weeks, falling more than 2%. The Nasdaq shed 4.7% over the week, while the Dow ended slightly lower.
Semiconductor stocks bore the brunt of the sell-off. The iShares Semiconductor ETF plunged 10%, marking its worst daily performance since March 2020. Broadcom dropped nearly 8% after a steep decline the previous session, while Marvell Technology sank more than 16%. Intel and AMD each lost around 11%, and Micron Technology tumbled 13%, extending losses from Thursday.
Risk appetite weakened across markets, with Bitcoin falling below $60,000 for the first time since late 2024. Despite the recent pullback, the iShares Semiconductor ETF remains up roughly 79% year-to-date.
The sell-off comes ahead of the highly anticipated SpaceX IPO next week, expected to be the largest public offering in history. While the listing has fueled excitement around technology and AI-related investments, some investors worry it could signal excessive market optimism. Others suggest capital is being rotated out of chip stocks and cryptocurrencies to make room for participation in the offering.
Friday's decline was also influenced by stronger-than-expected economic data. The U.S. economy added 172,000 jobs in May, significantly exceeding forecasts of 80,000. Following the report, Treasury yields jumped, with the 10-year yield moving above 4.5% and the 30-year yield surpassing 5%, raising concerns about higher borrowing costs and tighter financial conditions.
As technology shares came under pressure, investors shifted toward defensive sectors. Healthcare and consumer staples stocks outperformed, with Colgate-Palmolive rising 4%, Coca-Cola gaining more than 3%, and Johnson & Johnson advancing 2%.
