Key takeaways
- Nasdaq rebounds after its sharpest decline in 19 months
- Nvidia jumps 5.6% as semiconductor stocks recover
- Strong jobs data raises December Fed rate expectations
US stocks staged a partial recovery on November 6, with the Nasdaq Composite climbing 1.73% as Nvidia and other semiconductor companies rebounded following one of Wall Street's steepest technology selloffs in years.
According to Reuters' November 6 market report, the S&P 500 gained approximately 1% by 10:21 a.m. ET, while the Dow Jones Industrial Average was little changed.
Nvidia shares surged 5.6%, and the semiconductor index advanced 4.6%. However, stronger-than-expected US employment data raised concerns that the Federal Reserve could increase interest rates in December, limiting broader market optimism.
Nasdaq Recovers After $3 Trillion AI Stock Rout
Friday's rebound followed a historic selloff that erased nearly $3 trillion in market value from S&P 500 companies, according to Reuters.
On Thursday, the Nasdaq plunged 5.52%, its largest daily decline in 19 months. The S&P 500 dropped 4.36%, while the Dow lost 3.44%, or approximately 1,833 points.
The decline deepened a correction that had already pushed the Nasdaq 100 more than 10% below its October peak.
Investors were reassessing AI infrastructure spending following Democratic gains in the US midterm elections, which raised expectations of tighter data center regulation.
Concerns about construction restrictions have also created an unusual market dynamic. As Coinpaper's analysis of data center scarcity explained, restrictions could increase the value of existing computing facilities while making new projects harder to finance.
Despite Friday's rebound, the Nasdaq remained on course for its fourth consecutive weekly decline.
Nvidia and Chip Stocks Rally as Investors Buy the Dip
Semiconductor companies led the recovery following Thursday's particularly severe losses.
Nvidia gained approximately 5.6%, while the Philadelphia Semiconductor Index rose 4.6% after losing more than 12% in the previous session.
The rebound followed substantial selling across companies exposed to AI infrastructure. Earlier Marvell and Palantir declines illustrated how investors have become increasingly sensitive to valuations and spending expectations.
However, the industry's challenges extend beyond share prices.
Nvidia continues navigating restrictions involving Chinese AI customers, while data center operators face financing and electricity constraints.
The latest rebound therefore does not necessarily signal that the technology correction has ended.
Strong Jobs Report Raises Fed Rate Hike Expectations
Friday's employment figures introduced another source of uncertainty.
US nonfarm payrolls increased by approximately 165,000 in October, exceeding expectations, while unemployment declined to 4.1%.
Traders subsequently raised the implied probability of a December Federal Reserve rate increase to approximately 78%, according to Reuters.
Higher interest rates could pressure growth stocks by increasing borrowing costs and reducing the present value of expected future earnings.
The concern follows an earlier rise in US Treasury yields toward 5%, which increased scrutiny of debt-financed technology investments.
The latest market volatility also contrasts with the pre-election uncertainty around AMD earnings and interest rates.
