Nasdaq drops 4% intraday as tech sell-off rotates into defensive sectors

Summary

The Nasdaq Composite experienced a sharp intraday drop of over 4% before recovering to close down about 1%. Traders sold high-beta AI-linked stocks like Strategy, AppLovin, and Lumentum around midday, with chipmakers suffering the heaviest losses—Marvell dropped 10% after a recent 10% gain tied to joining the S&P 500. The "Parabolic 7" chip stocks showed broad weakness after a chip index nearly doubled in weeks. Meanwhile, money rotated into consumer defensive sectors, with Smucker rising double digits, and Home Depot, Sherwin-Williams, real estate, staples, and utilities finishing higher.