• The Nasdaq 100 fell 1% in afternoon trading, extending its recent slide as rising bond yields and mixed earnings outlooks pressured megacap tech stocks.
  • Nvidia (NVDA), Apple (AAPL), and Microsoft (MSFT) each dropped more than 1.5%, leading the index lower amid concerns over stretched valuations and a potential rotation into value sectors.
  • Investors are closely watching the Federal Reserve's next move after hawkish comments from several officials, with rate-sensitive tech names particularly vulnerable.

The tech-heavy index's decline accelerated after a weak start to the week, with the Nasdaq 100 down 3.2% over the past five sessions. The yield on the 10-year U.S. Treasury note climbed to 4.35%, its highest level in three months, weighing on high-growth stocks.

“It’s a classic risk-off move driven by macro uncertainty,” said a senior trader at a New York-based hedge fund, declining to be identified. “Tech has been priced for perfection, and any whiff of higher-for-longer rates is triggering profit-taking.”

Nvidia, the index’s top performer this year, shed 2.8% despite upbeat analyst notes on its AI chip demand. Apple fell 1.7% after a report indicated softer-than-expected iPhone sales in China, while Microsoft slipped 1.4% as its cloud growth rate showed signs of plateauing.

The selloff was broad-based, with 78 of the 100 constituents declining. The Philadelphia Semiconductor Index also dropped 2.1%, reflecting the sector’s sensitivity to interest rate expectations.

“We’re seeing a rotation out of tech into energy, financials, and other cyclical sectors that benefit from a stronger economy,” said Emily Carter, a portfolio manager at a large asset manager. “But this doesn’t signal a looming crash—it’s more of a recalibration.”

Market participants are now focused on upcoming earnings from Amazon and Alphabet next week, as well as the Fed’s preferred inflation gauge due Friday. A hotter-than-expected reading could further roil markets.

“Without a clear catalyst, the near-term bias remains lower,” the trader added. “But we’re not at panic levels yet.”

Correction: An earlier version of this article misstated the decline of the Nasdaq 100 as 1.5%. The index fell exactly 1.0% at the time of publication.