Nasdaq trims losses as chips rebound, but Fed rate-hike risk lingers

what happened

The Nasdaq Composite traded about 1.8% higher on Friday after posting its steepest one-day decline in 19 months on Thursday, which confirmed a correction, Reuters reported. Chip stocks are recovering: Nvidia gained 6.5%, and the broader semiconductor index rose over 6% after falling about 12% in the prior session.

The previous day's slide was driven by worries that Democrats, who won their midterm elections, could toughen AI regulation and slow data-center construction. At the same time, the jobs data beat expectations, with nonfarm payrolls rising more than forecast in October and the unemployment rate falling to 4.1%.

Traders raised bets on a Fed rate hike, with Reuters citing a 78% chance of a December move versus 70% earlier. The S&P 500 gained about 1% but six of 11 major sectors were negative, and oil was on track for a sharp weekly decline, according to the agency.

why it matters

The key tension for markets is that strong employment and rising tightening expectations weigh on richly valued tech stocks, while the chip rebound suggests Thursday's selloff may have overshot. Direction from here depends on the Fed's stance and any news on AI regulation.

market impact

Nasdaq and chips: Fed rate expectations and AI rules drive volatility, with the rebound pulling against rate-hike risk.

• ↔Nasdaq mixed — chip rebound offsets rising expectations of a Fed rate hike
• ↔S&P 500 mixed — tech-led gains are undercut by weakness in six of 11 sectors

instruments

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