US Stock Market: Nasdaq 100 Records Largest Drop in Over a Year as Traders Exit Tech Sector

Wall Street's historic weekly winning streak has come to an end. A sell-off in technology stocks and rising bond yields weighed on U.S. equities, as a robust employment report released earlier boosted bets that the Federal Reserve's next interest rate move could be a hike.

Growing concerns over valuations pushed the S&P 500 to close 2.6% lower, failing to achieve a tenth consecutive week of gains.

Five of the index's 11 sectors advanced during the session, led by consumer staples and utilities.

The information technology sector within the S&P 500 plunged 5.8%, while a UBS basket of stocks benefiting from artificial intelligence tumbled 7.0%, with NuScale Power, Oklo Inc., and Marvell Technology Inc. experiencing the steepest declines.

Lululemon Athletica Inc. closed down 8.6% after the athletic apparel company lowered its full-year outlook due to deteriorating performance in its North American business.

The Nasdaq 100 Index dropped 4.8% at the close, marking its largest single-day percentage decline since April 2025.

A gauge of chipmaker stocks fell 10%.

Meta Platforms Inc. declined 5.5% following a Financial Times report that the company is considering a large-scale sale of new shares.

Mark Hackett of Nationwide noted that the tech sell-off follows a strong earnings season for AI companies, as investors question whether their growth rates have peaked.

"We are seeing another powerful pullback in tech," said veteran strategist Louis Navellier. "This looks like profit-taking in semiconductors. Additionally, rising rates hit the market today. That's because the jobs data was very strong, reducing expectations for Fed rate cuts."

Neil Dutta of Renaissance Macro Research suggested the market might be interpreting the day's strong economic data as bad news for stock prices, but this could be a knee-jerk reaction from the bond market repricing the Fed's path.

"At the end of the day, if the Fed is hiking because employment is expanding, I'm not sure I would necessarily view that as bad for the stock market outlook," Dutta said. "Stagflation is bad for stocks, but an inflationary boom is not."

At the close, the S&P 500 was down 2.6% at 7,383.74.

The Dow Jones Industrial Average fell 1.4% to 50,866.78.

The Nasdaq Composite Index dropped 4.2% to 25,709.43.

The Russell 2000 Index declined 3.5% to 2,833.501.