Stock Market Sell-Off: Chip Stocks Dropped as Jobs Report Dashes Fed Rate Cut Hopes

The stock market experienced a dramatic downturn on Friday, with the S&P 500 and Nasdaq plunging 2.6% and 4.2% respectively, erasing recent gains and leaving investors reeling. The sell-off was driven by a combination of disappointing earnings reports from major tech companies, a stronger-than-expected jobs report, and growing concerns about potential Federal Reserve interest rate hikes. Chip stocks, in particular, faced heavy pressure, with Broadcom’s shares plummeting 12.6% after missing revenue expectations and underperforming AI-related business segments. CNBC reported that the S&P 500 snapped a nine-week winning streak, while the Nasdaq faced its worst week since early 2025.

Chip Stocks Take a Hit: Broadcom, Intel, and the AI Sector

Broadcom’s earnings report on Thursday was a major catalyst for the sell-off, as the company’s revenue fell short of expectations, despite strong performance in its AI semiconductor division. The stock closed the week down 13.7%, making it the worst-performing stock in the tech sector. Intel also struggled, losing 13.5% for the week as investors questioned its ability to keep pace with rivals like Nvidia. CNBC noted that the decline in chip stocks was exacerbated by broader concerns about demand for semiconductors amid a potential slowdown in AI adoption.

Not all chip stocks fared poorly. Marvell Technology surged 28% after Nvidia CEO Jensen Huang predicted the company would become a “next trillion-dollar company.” However, the rally was short-lived, with investors remaining cautious about the sector’s long-term prospects. CNBC highlighted that the volatility in chip stocks reflected broader uncertainty about the tech sector’s ability to sustain growth in a high-interest-rate environment.

IPOs and Stock Sales: A New Wave of Supply

The market’s woes were compounded by the announcement of several high-profile