Nasdaq rebounds after AI sell-off and strong jobs data

The Nasdaq rebounded in early Friday trading after an AI-driven sell-off pushed the tech-heavy index into correction territory, while stronger-than-expected US jobs data added new pressure to expectations for interest rates.

The Nasdaq Composite Index rose 1.85 percent to 24,763.96 points in early trading. The S&P 500 gained 0.3 percent to 7,378.6, recovering only a fraction of Thursday's losses, while the Dow Jones Industrial Average fell 0.34 percent to 51,350.11.

The Nasdaq had suffered its worst one-day decline in 19 months on Thursday. The broader slide has left it down about 12 percent over the past month and wiped about $2.5 trillion from the market value of Nasdaq companies.

Investors are weighing concern that a Democratic-controlled Congress after this week's midterm elections could bring tougher regulation of artificial intelligence, including data-centre approvals.

Patrick O'Hare of Briefing.com said Thursday's session was “like having the rug pulled out from under you” after gains on Wednesday. He said the market was hoping to reset, but that the path ahead remained unclear after the election.

Stephen Innes of SPI Asset Management said the AI industry may have the money to build data centres, “but it still needs local communities and regulators to permit them.” He said political opposition could slow approvals and raise electricity and financing costs.

The Labor Department said the US economy added 165,000 jobs in October, above the roughly 59,000 analysts expected, while the unemployment rate fell to 4.1 percent from 4.2 percent. Traders increased bets that the Federal Reserve will raise interest rates in December after the report.

Larry Holzenthaler of Catalyst Funds said the data gave the Fed room to continue raising its target rate to address inflation.

Among individual companies, chip stocks recovered some ground after Thursday's rout. Nvidia rose 6.1 percent and Micron rose 6.5 percent in early trading. Airbnb surged after raising its full-year revenue growth forecast.