Nasdaq Plunges 4.2% Friday as Market Signals Tighter Funding Conditions

According to Barron's, the Nasdaq Composite plunged 4.2% on Friday, marking its largest single-day decline since April 2025 and ending the S&P 500's nine-week winning streak. The State Street Technology ETF (XLK-US) fell 6.66% in the same session, with a cumulative three-day loss of 9.1%. Multiple market signals—credit markets, currency moves, and commodities—are flashing warning signs that funding conditions will tighten ahead.

The selloff follows a strong May employment report released Friday, with U.S. nonfarm payrolls rising by 172,000, roughly double market expectations, and prior months revised up by 93,000. CME FedWatch data now reflects a 71.8% probability of at least one rate hike by year-end, with the federal funds rate currently at 3.50%–3.75%. The 10-year Treasury yield has broken back above 4.5%, pressuring equities, while gold fell $223 per ounce to $4,337.10, down over 18% from January highs.