Dow tumbles 680 points as chip rout sends Nasdaq to biggest drop since 2025

• The Philadelphia Semiconductor Index plunged 9% as Broadcom fell 12% after failing to raise its AI chip forecast, while Micron dropped 11%, Intel fell 9%, and AMD declined 10%
• May nonfarm payrolls increased by 172,000 versus 80,000 expected, pushing the 10-year Treasury yield above 4.5% and markets now pricing in a potential Fed rate hike before year-end
• Investors rotated into defensive stocks like Colgate-Palmolive and Coca-Cola (both up 3%), while crypto-related equities weakened as Bitcoin fell below $100,000 for the first time since late 2024

Market Summary: Chip Rout Triggers Broad Wall Street Selloff

Market Performance:

US equities experienced a sharp downturn Friday, with the Dow Jones falling 685 points (-1.3%), the S&P 500 declining 2.6%, and the Nasdaq Composite plunging 4%—its largest single-day drop since early 2025. The selloff ended the S&P 500's nine-week winning streak, its longest since late 2023.

Semiconductor Sector Collapse:

Semiconductor stocks led the decline, with the Philadelphia Semiconductor Index tumbling 9%. Broadcom fell 18% after failing to raise its full-year AI chip forecast despite beating quarterly expectations. Other major losses included Micron Technology (-11%), Intel (-9%), AMD (-10%), and Marvell Technology (-12%).

Economic Data and Rate Concerns:

A stronger-than-expected May jobs report showed 172,000 nonfarm payroll additions versus 80,000 expected, with unemployment steady at 4.3%. This raised concerns about delayed Federal Reserve rate cuts, with markets now pricing in a potential rate hike before year-end. Treasury yields surged, with the 10-year exceeding 4.5% and the 30-year topping 5%.

Sector Rotation:

Investors shifted toward defensive positions, with healthcare and consumer staples outperforming. Colgate-Palmolive and Coca-Cola each gained over 3%, while Johnson & Johnson rose 2%. Cryptocurrency-related stocks declined as Bitcoin fell below $65,000 for the first time since late 2024.

Additional Factors:

Market participants cited the upcoming SpaceX IPO and ongoing Middle East geopolitical tensions as contributing to technology sector rotation and broader investor caution. The selloff reflects reduced appetite for high-growth technology stocks amid a higher-for-longer interest rate environment.