FNGU plunges 16% in one session as tech selloff deepens

The MicroSectors FANG+ 3X Leveraged ETN lost 16% on June 5, erasing a $10,000 position to $8,392, as a Broadcom-guided tech rout met a hotter-than-expected payrolls report. The note closed at $26.99, down from $32.16 the prior session, extending a five-day slide that reached 22% from the May 29 close of $34.76.

"The market is pricing more pain near term and partial recovery by month end," according to Polymarket data, where traders gave NVIDIA a 91.5% probability of closing above $170 by end of June but only a 57.5% chance of clearing $200. Alphabet's June 8 direction market sat at 60.5% down, while Microsoft's two-day direction traded at 62.5% down.

NVIDIA fell 6% to $205.10, shedding roughly $279 billion in market cap. Broadcom dropped 8% to $385.73, capping a 19.5% two-day collapse from $479.23 on June 3 after its Q2 FY26 earnings beat but Q3 AI semiconductor guidance of $16 billion fell short of whispered expectations. Meta Platforms lost 6% to $593, Microsoft gave up 3% to $416.67, and Alphabet slipped 1% to $368.53. The 2-year Treasury yield spiked to 4.16%, a 16-month high, after payrolls printed 172,000 against an 80,000 estimate, reviving rate-hike fears that punish long-duration growth stocks.

The selloff leaves FNGU still up 28.1% over 12 months and up 6.85% year to date, but the daily-reset structure means chop kills compounding. The 10-year Treasury yield closed at 4.47% on June 4, in the 93rd percentile of its trailing 12 months, while the VIX sat at 15.40 — in the lower quartile of its range — before Friday's session likely pulled it higher.

Three structural risks in a 3x note

FNGU is a 3x daily leveraged exchange-traded note issued by Bank of Montreal, tracking the NYSE FANG+ Index. When the underlying basket falls roughly 5%, the note is engineered to fall about 15%. On Friday it fell a little more than that because the index was top-heavy in the names doing the most damage. The daily reset means the note tracks daily moves, not cumulative ones — in a chop tape, it bleeds value even when the underlying ends up flat.

The second risk is concentration. FANG+ holds 10 names, and when NVIDIA and Broadcom together represent a quarter of the move on any given day, the equal-weight basket behaves like a concentrated AI semiconductor bet dressed up as diversified tech. The third is that FNGU is an ETN, not an ETF — unsecured senior debt of Bank of Montreal, carrying credit risk that is small in practice and real in theory.

Three developments to watch next week

The fundamental backdrop has not changed. NVIDIA's Q1 FY27 print on May 20 showed Data Center revenue of $75.246 billion, up 92% year over year, with networking up 199%. Broadcom's $16 billion AI semi guide is a disappointment only relative to the trajectory the market had baked in. What changed is the price of money: the 10-year yield at 4.47% and the front end ripping higher on the payrolls beat.

Three developments bear watching: AI capex commentary from hyperscalers into the next earnings cycle, where the question is whether Meta's $125 billion to $145 billion range and the run-rate spend at Microsoft and Alphabet hold up; Alphabet's $80 billion stock sale execution; and the SpaceX IPO on June 12, which will test retail appetite for high-beta tech.

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