NEW YORK, June 5 (Reuters) - Wall Street's best run in three years ended unhappily on Friday, with investors taking flight from hot technology shares, safe government bonds and gold alike following a strong May jobs report that reignited fears that U.S. interest rates may be rising again by year end.

The Nasdaq composite dropped 4.2% on Friday in its worst single-day decline in more than a year, extending this week's investor retreat from favored AI and semiconductor companies. The S&P 500 dropped 2.65%, ending a nine-week string of advances in the index that was its longest since 2023, a week before SpaceX is expected to come to market with the largest-ever IPO. 

Analysts and portfolio managers said the selloff wasn't shocking, given the scale of gains across the market since a March pullback driven by the war with Iran, and many indicated they expect buyers to return given the sharp rise in technology-firm earnings and the generally positive outlook for the U.S. economy.

Even so, Friday's action surely came as a shock for investors who have bought into the scorching rallies of recent months. The semiconductor index dropped 8.8% on Friday, extending its slide since Tuesday's close to 12%. Nvidia ( NVDA ), the world's most valuable company, dropped 6.2% and Qualcomm fell 11%. The volatility index measuring expected stock swings rose 39%. 

Investors said the pullback was triggered by soft guidance this week by investor favorite Broadcom, which fell 6.8% on Friday.

But technology wasn't the only site of carnage. U.S. government bonds also declined, with the 10-year Treasury yield rising 7 basis points to 4.54% and the 2-year note whose yield is driven by Federal Reserve rate expectations rising 11 basis points to 4.16%, its highest since early 2025. Gold fell 3.6%, reflecting the market expectation that inflation-adjusted "real interest rates" will rise after the hot inflation readings of 2026.

COMMENTS:

CAROL SCHLEIF, CHIEF MARKET STRATEGIST, BMO PRIVATE WEALTH, MINNEAPOLIS:

"It's partly rates but it could also be partly an excuse to sideline some funds for upcoming IPOs. Tech has been on a tear and is still up high teens over the past three months. A bit of pause is warranted!"

ANTHONY SAGLIMBENE, CHIEF MARKET STRATEGIST, AMERIPRISE FINANCIAL, TROY, MICHIGAN

"There's two forces at work. We got a much stronger than expected non-farms payrolls report, twice what consensus was. It's pushed back little on the idea of rate cuts. it could add some inflationary pressures to the economy. Treasury yields are higher.

"Wednesday we got a very good earnings report from Broadcom but its guidance was softer. We saw the selling pressure on Thursday that extended today. It's gone beyond just Broadcom, it's gone into the other AI chip makers, it's gone into AI adjacent companies. Investors are just looking for an excuse to take some profits. 

"The job market is strong. The secular tailwinds of AI still exist, but there's some rationalization taking place in the market, and that's healthy longer term."

RYAN DETRICK, CHIEF MARKET STRATEGIST, CARSON GROUP, OMAHA, NEBRASKA:

"After the record run we've seen the last nine weeks in equities, specifically tech and semiconductors, the dam just broke today. Obviously, the stronger-than-expected jobs report puts the Fed in a tough spot regarding any interest rate cut for the rest of the year. And the market is throwing a fit by hitting the big winners so far this year."

PETER TUZ, PRESIDENT OF CHASE INVESTMENT COUNSEL, CHARLOTTESVILLE, VIRGINIA: 

"What you saw today was a continuation of what started yesterday with Broadcom.  The quarter was great, but the guidance wasn't what people expected.  

"People are wondering whether this will spread to other chip companies and related companies in the future.  As you know, they have done tremendously well in the past few quarters so a sell off isn't all that unwarranted. 

"I think there is some concern about the big calendar of IPOs starting next week adding additional risk to the market."

DENNIS DICK, A PROPRIETARY TRADER AT ​TRIPLE D TRADING, GEORGIAN BAY, ONTARIO 

"You've had a lot of people here that were just blindly buying the dip. Blindly buying the dip had been winning you money, but that ended today." 

OHSUNG KWON, CHIEF EQUITY STRATEGIST AT WELLS FARGO, NEW YORK:

"The market reaction today was more driven by positioning rather than fundamentals. The semiconductor sector was way overbought. that's why we're seeing the sell-off. I don't think it's the end of the semi bull market.

"We're going to continue to see volatility into the Fed unless CPI comes in soft."