Nasdaq drops over 3% as rate‑hike fears hit tech stocks

The Nasdaq 100 slid more than 3% on Friday, driven by a surge in Treasury yields after a hotter‑than‑expected jobs report raised expectations of further Federal Reserve tightening [2]. The decline marked the worst daily drop for the tech‑heavy benchmark since October 2025, with AI‑related and semiconductor stocks bearing the brunt of the sell‑off [2].

Key takeaways

• The Nasdaq 100 fell 3.2%, putting it on track for its steepest one‑day decline since October 2025 [2].
• Treasury yields rose sharply, with the 2‑year yield up over 10 basis points to 4.15% and the 10‑year yield reaching 4.54% [2].
• Bitcoin dropped 17% for the week, heading toward its worst weekly performance since November 2022 [2].
• Gold prices fell 3.1% and silver plunged nearly 7% as precious‑metal investors sold off [2].
• The Technology Select Sector SPDR Fund (XLK) was the worst‑performing sector, sliding about 5% as semiconductor and AI hardware stocks tumbled [2].

Rate‑hike speculation rattles tech‑heavy indices

A robust payroll report showed the economy added 172,000 jobs in May, far exceeding the 85,000 forecast, while the unemployment rate held at 4.3% [2]. Coupled with April’s CPI increase of 3.8% year‑over‑year—the highest since May 2023—the data reinforced expectations that the Federal Reserve may raise rates later this year and possibly add another hike in 2027 [2]. As a result, the policy‑sensitive 2‑year Treasury yield jumped more than 10 basis points, and the 10‑year yield rose to 4.54%, pushing the dollar up nearly 1% [2].

Tech stocks reacted sharply. The Nasdaq 100’s 3.2% fall was driven by a broad sell‑off in high‑growth AI and semiconductor names, with the XLK sector losing roughly 5% as chips and AI hardware faced the “Broadcom hangover” [2]. Meanwhile, the S&P 500 slipped 1.8% and the Dow Jones Industrial Average dipped 0.8%, reflecting their lower exposure to technology [2].

Crypto and commodities join the downturn

Digital assets also felt the pressure. Bitcoin’s price fell 17% over the week, positioning it for its worst weekly performance since the November 2022 FTX collapse [2]. Gold futures dropped 3.1%, and silver prices plunged nearly 7%, marking a sharp sell‑off in precious metals as investors fled riskier assets [2].

Why it matters

The market reaction underscores how sensitive technology‑heavy indices are to monetary‑policy expectations. With Treasury yields climbing and the Fed’s rate‑hike outlook tightening, investors are rotating out of growth‑oriented tech and AI stocks into more defensive positions. Continued upward pressure on yields could keep the Nasdaq under strain, while the broader market’s modest declines suggest a potential widening of risk‑off sentiment. Upcoming data releases, such as the Consumer Price Index, will be closely watched for clues on inflation trends and further Fed actions, shaping the trajectory of both equity and crypto markets in the weeks ahead.