Nasdaq 100 wipes 1.5% gain as tech rout deepens, gold slides

The Nasdaq 100 turned negative Monday after rising 1.5%, while the Philadelphia Semiconductor Index slumped 2.7% and spot gold fell 2% to $4,000.49.

"The market is repricing for a Fed that may need to hike as soon as September, and tech is bearing the brunt because that's where valuations are most extended," said Michael Wilson, chief equity strategist at Morgan Stanley.

The S&P 500 nearly erased all its intraday gains, while the Dow's advance narrowed to 0.3%. The reversal extended last week's rout that pushed the Invesco QQQ Trust ETF down 4.6% over five sessions to $706.52, below its 20-day moving average of $724.72. The CBOE Nasdaq Volatility Index surged relative to the VIX, with the spread blowing out to 12 points — the widest in at least 23 years, according to The Kobeissi Letter.

The selloff highlights a growing disconnect between robust corporate earnings — Goldman Sachs data shows Nasdaq 100 EPS growth is expected at 43% this year — and a macro backdrop that now points to the first Fed rate hike in three years. Markets are pricing a 47% probability of a move at the September meeting, per the CME FedWatch tool, after May's headline PCE hit 4.1%, the highest in three years.

The Philadelphia Semiconductor Index's 2.7% drop led the tech rout, with the sector extending a weekly decline that saw the Nasdaq Composite fall 4.6% last week. The Kospi tumbled 7.1% over the same period, reflecting the global nature of the semiconductor selloff. Micron Technology Inc.'s earnings beat failed to stem the bleeding, as investors focused on the macro headwinds from a potential tightening cycle.

Gold Breaks Below $4,000 as Deleveraging Hits Stocks and Haven Assets

The simultaneous decline in gold — a traditional safe haven — alongside equities points to a forced deleveraging event rather than a fundamental shift in demand for safe-haven assets. Spot gold fell more than 2% to $4,000.49 an ounce, breaking below the psychologically important $4,000 level. The dollar index held steady above 101.3, while Brent crude oil traded at $72.50 a barrel, down 10.6% for the week.

The 10-year US Treasury yield moved higher as the market absorbed the implications of the PCE data and Treasury Secretary Bessent's endorsement of Fed Chair Warsh's autonomy, which markets interpreted as a green light for policy tightening. The Atlanta Fed's tracker now shows the probability of a rate hike within the year surpassing 75%.

The selloff coincided with three catalysts: a 4.1% year-over-year reading in May headline PCE that exceeded the 3.4% core reading, a hawkish shift in Fed expectations with September emerging as the earliest potential hike date, and concentrated selling in semiconductor names that had led the bull market. The VIX rose as the S&P 500's advance/decline ratio deteriorated, with decliners outpacing advancers by a wide margin.

This article is for informational purposes only and does not constitute investment advice.