NASDAQ Crashes 4% as $1.7T Wiped Out in AI Stock Bloodbath

The NASDAQ tumbled 4% in its worst day since April 2025 as chip stocks lost $1.3 trillion. The Silicon Review reports on the AI trade collapse triggered by a blowout jobs report.

The NASDAQ Composite plunged 4.18%, suffering its worst single-day decline since the Trump tariff shock of April 2025. The S&P 500 fell 2.6%, snapping a nine-week winning streak, while the Dow dropped 695 points.

The trigger was a stunning jobs report. The U.S. economy added 172,000 jobs in May, more than double the 80,000 economists expected. Unemployment held at 4.3%. For markets that have been betting on Fed rate cuts, this was a nightmare.

The market was priced for perfection. The jobs report shattered it. Now traders are pricing in a 67% chance of a Fed rate hike by December the exact opposite of what they expected two weeks ago.

Semiconductor stocks were annihilated. The PHLX Semiconductor Index plunged over 10%, its worst day since March 2020. Chipmakers lost an estimated $1.3 trillion in market value on Friday alone.

Nvidia fell 6%, wiping over $300 billion from its market cap. Micron tumbled 13%. Marvell collapsed 17%. AMD dropped nearly 11%. Broadcom extended its two-day slide to nearly 20% after weak guidance.

The AI trade that had powered markets for two years finally cracked. Investors who had piled into semiconductor stocks during the 31% NASDAQ rally from March lows were rushing for the exits.

The selling was not contained to chips. The "Magnificent Seven" tech giants were all lower. Tesla and Nvidia each fell over 6%. Meta dropped 5% after reports it may raise equity to fund AI infrastructure. Alphabet had already raised $85 billion earlier this week.

The 10-year Treasury yield surged to 4.55%, up from 4.47% before the jobs report, as traders abandoned hopes for rate cuts. The CME FedWatch tool now shows a 67% probability of a rate hike by December.

Bitcoin tumbled below $60,000 for the first time since October 2024, falling over 9% to $59,300. Crypto-related stocks dropped between 6.5% and 11%.

Analysts rushed to explain the carnage. "After the record run we've seen the last nine weeks, the dam just broke today," said Ryan Detrick, chief market strategist at Carson Group. Wells Fargo's Ohsung Kwon called the selloff "more driven by positioning rather than fundamentals," noting the semiconductor sector was "way overbought." 

As the NASDAQ suffers its worst day in over a year with $1.7 trillion erased from stocks, The Silicon Review examines whether this is the beginning of the end for the AI rally or simply the market's way of reminding everyone that what goes up must eventually correct.

Q: How much did the NASDAQ fall on June 5, 2026?
A: The Nasdaq Composite plunged 4.18%, closing at 25,709. It was the worst single-day decline since April 2025 during Trump's tariff war.

Q: What caused the stock market crash on June 5, 2026?
A: A stronger-than-expected jobs report showed the economy added 172,000 jobs, more than double forecasts. This killed hopes for Fed rate cuts and increased expectations of a rate hike by December.

Q: How much did chip stocks lose on Friday?
A: U.S.-traded chipmakers lost approximately $1.3 trillion in market value on Friday alone. The PHLX Semiconductor Index plunged over 10%, its worst day since March 2020.

Q: Why did AI and tech stocks crash when the jobs report was good?
A: Strong hiring reduces the likelihood of Fed rate cuts. Tech stocks are highly sensitive to interest rates because their valuations depend on future growth. Higher rates make those future earnings less valuable today.

Q: How much money was wiped out from the stock market on June 5?
A: Approximately $1.7 trillion was erased from equities as traders dumped AI, semiconductor and momentum-linked shares.

Q: What is the probability of a Fed rate hike now?
A: The CME FedWatch tool shows a 67% probability of a rate hike by December, up from roughly 34% before the jobs report.