Nasdaq Falls 4%: The Long-Warned Collision Course Is No Longer Theoretical

The Nasdaq fell 4% following a stronger-than-expected May jobs report (172,000 jobs added), shifting market expectations from hoping for rate holds to contemplating potential Fed rate hikes. The market's fragile structure—characterized by crowded AI positioning, stretched semiconductor valuations, elevated leverage in Korean equities, and rising Treasury yields—finally collapsed. While this represents a positioning and valuation reset rather than an economic recession, the correction reveals how dependent the AI rally had become on momentum and leverage. The author argues this correction into a healthy economy is preferable to one driven by economic deterioration.