Wall Street recovers slightly after AI selloff

Wall Street displayed mixed performance on Friday after a sharp decline in artificial-intelligence stocks, with the Nasdaq Composite advancing 1.1% and the S&P 500 gaining 0.3%. The Dow Jones Industrial Average, however, dipped 0.5%, pressured by a stronger-than-expected jobs report that lifted Treasury yields.

The partial recovery came after Thursday’s historic downturn wiped out roughly $2.5 trillion in market value for Nasdaq-listed companies in one day. While Friday’s gains offered some relief, they remained limited compared to the prior day’s losses, leaving major indexes with weekly declines that left investors questioning whether the AI-driven rally had stabilized or simply paused its decline.

AI stocks face a reassessment

Thursday’s selloff highlighted growing skepticism about the sustainability of the AI investment surge. Investors questioned whether outlays on chips, data centers, and related infrastructure could justify the high valuations assigned to AI-linked stocks. The Wall Street Journal reported that some were already preparing for reduced data-center expansion following the midterm elections, a shift that particularly affected semiconductor manufacturers and infrastructure providers.

The Nasdaq’s 5.4% drop on Thursday sent the index into correction territory—a decline of at least 10% from its peak. The Dow lost 1,833 points, and every sector in the S&P 500 finished lower. The selling extended beyond speculative AI stocks, as investors shifted toward Treasury bonds for safety.

Semiconductor shares rebounded Friday, with the Philadelphia Semiconductor Index up 4.2% and the Nasdaq-100 rising 1.5%, but the recovery remained uneven. Buyers focused primarily on technology, leaving other sectors behind. This unevenness matters because gains in heavily weighted tech stocks can lift major indexes without indicating broader market confidence.

The core issue remains unresolved: whether this is a temporary pause or the start of a deeper correction. Concerns about data-center growth, financing costs, and whether AI services will meet revenue expectations persist. Even as semiconductor stocks climbed, those underlying doubts remained intact.

Jobs report intensifies market pressures

A stronger-than-expected October jobs report added further complexity. U.S. employers added 165,000 jobs, far exceeding the 59,000 forecast, while the unemployment rate fell to 4.1% from 4.2%. The gains spanned professional services, healthcare, and transportation.

However, the report included cautionary notes. A broader unemployment measure, accounting for discouraged workers and those working part-time for economic reasons, rose to 7.9% from 7.6%. For markets, the data reinforced expectations that the Federal Reserve would prioritize inflation control, keeping rate cuts off the table for now.

Treasury yields responded by climbing. The 10-year yield reached 4.87%, up three basis points. The dollar index rose 0.7%, adding pressure on risk assets even as tech stocks showed signs of recovery.

Oil prices were broadly unchanged on Friday, with West Texas Intermediate crude trading around $90 a barrel and Brent crude around $98. Both benchmarks had fallen sharply over the week—Brent down more than 16%, U.S. crude nearly 13%.

The Nasdaq’s weekly loss of 3.4% marked its steepest decline since February 2025, while the S&P 500’s 2.7% drop was its worst performance since April of that year. The S&P 500 closed at 7,376.86, up 0.31% from Thursday’s 4.4% plunge, but the index remained 2.7% lower for the week. The contrast between the Nasdaq’s 1.1% gain and the Dow’s 0.5% decline showed the market’s uneven recovery, with technology stocks driving gains while other sectors lagged.

Gold and commodities adjust to shifting risks

Gold prices dipped modestly Friday, trading between $4,029.50 and $4,107.90 per ounce, with spot gold closing at a bid of $4,070.10 and an ask of $4,072.10. The 0.41% decline reflected a broader shift away from safe-haven assets as Treasury yields rose following the jobs report.

Fed policy and economic indicators under scrutiny

Treasury yields increased across maturities Friday, with the 10-year yield climbing to 4.87% and the 30-year yield rising slightly to 5.27%, reversing some of Thursday’s flight to safety. The combination of strong economic data and raised yields kept speculation about a December rate hike alive, further complicating the outlook for markets already dealing with AI-related uncertainties.