Wall Street technology stocks rebounded on Friday following a historic artificial intelligence selloff, but the Dow Jones Industrial Average dropped on interest rate fears.
The tech-heavy Nasdaq Composite led the market higher with a gain of 1.09 per cent to close at 24,579 points, while the broader S&P 500 rose 0.31 per cent to 7,376 points. In contrast, the Dow Jones fell 0.46 per cent to finish at 51,285 points as unexpectedly robust economic data stirred concerns that borrowing costs will remain higher for longer.
The bounce followed a bruising session on Thursday that saw investors dump shares across the technology sector. The initial wave of selling had been sparked by concerns surrounding the outcome of the United States midterm elections, where a Democratic victory led investors to worry that a changing political landscape could bring stricter regulation and slow growth across the emerging artificial intelligence industry.
US jobs report and Federal Reserve rate expectations
Market sentiment was heavily shaped on Friday by the latest monthly employment figures released by the US Bureau of Labor Statistics. Non-farm payrolls increased by 165,000 in October, comfortably beating the median forecast of 65,000 jobs expected by Wall Street economists.
The government agency also revised employment numbers for previous months, adding a combined 84,000 jobs to the totals for August and September. At the same time, the national unemployment rate ticked down to 4.1 per cent, compared with 4.2 per cent recorded in September.
The resilience of the labour market reinforced expectations that the Federal Reserve will raise its benchmark interest rate at its upcoming monetary policy meeting on December 9. The central bank had previously increased interest rates by 25 basis points in September, with policymakers warning that persistent price pressures would likely require further monetary tightening. According to the CME FedWatch tool, the market probability of another 25 basis point rate increase in December jumped to nearly 79 per cent following the employment data, up from roughly 73 per cent prior to the release.
Lale Akoner of eToro said that although strong employment was a positive development for household spending and corporate profitability, it gave the central bank greater room to raise borrowing costs because inflation remained well above the Federal Reserve long-term target of 2 per cent.
Treasury yields and inflation outlook
The prospect of additional monetary tightening sent ripples through the government bond market, pushing Treasury yields sharply upward. The yield on the benchmark 10-year Treasury note climbed to 4.859 per cent, while the 30-year Treasury bond yield rose to 5.262 per cent. Higher yields typically increase borrowing costs for businesses and weigh heavily on consumer-facing sectors.
Investor attention is now shifting toward critical inflation reports scheduled for next week, when the US government will publish the Consumer Price Index and the Producer Price Index. Jeffrey Roach, chief economist at LPL Financial, said the Federal Open Market Committee had the backing of the labour market to raise interest rates in December. Roach noted that several committee members were already arguing that borrowing costs should be higher if inflation figures showed no improvement.
Roach added that investors would be watching both the upcoming consumer price figures and early indications for the holiday shopping season. He explained that although consumers were drawing on their savings to sustain everyday spending habits, analysts still anticipated a healthy period for retail sales as the year came to an end.
Semiconductor rally and artificial intelligence stocks
Despite the pressure from rising yields, equity investors focused their buying on artificial intelligence infrastructure, including semiconductor makers, cloud computing providers, and data centre operators. Those segments had absorbed the heaviest losses during Thursday's market collapse, when the Nasdaq dropped 5.5 per cent in its steepest single-day decline since April 2025. That crash had erased nearly $2.5 trillion in market value, primarily from major technology companies.
Semiconductor manufacturers staged a noticeable recovery on Friday. The Philadelphia Semiconductor Index, a major benchmark tracking the chip industry, rose by more than 4 per cent, recouping a portion of the 12 per cent plunge it suffered on Thursday. Within the sector, shares of Nvidia advanced more than 3 per cent, while Advanced Micro Devices surged 10 per cent and Intel gained 8 per cent.
Gains extended to newer cloud infrastructure firms that supply specialised computing capacity for artificial intelligence models. Shares of CoreWeave advanced 6 per cent, Nebius rose by approximately 8 per cent, and IREN climbed by more than 18 per cent by the close of trading.
Wall Street debate over market direction
Market analysts offered differing views on whether Friday's rebound marked a lasting turning point for technology stocks. Fawad Razaqzada of StoneX Trading and Forex.com said the day's gains resembled short covering and bargain hunting rather than a genuine shift in investor confidence. Razaqzada said concerns over stricter regulatory oversight of artificial intelligence following the Democratic victory in the midterms, together with questions regarding corporate capital expenditure on artificial intelligence, continued to create headwinds for the sector.
In contrast, Goldman Sachs took a more constructive view of the market selloff, suggesting in a research note that the severe pullback created conditions for a medium-term recovery. Traders at the investment bank said the market backdrop was becoming more interesting as forced selling came to an end. The bank noted that while this was not necessarily a reason to aggressively take on new risk, it was growing harder for investors to overlook emerging opportunities once selling pressures began to ease.
Corporate earnings, Tesla and Dow Jones decliners
Away from artificial intelligence, several single stocks posted dramatic swings following corporate earnings reports. Airbnb surged 12 per cent after the online accommodation platform posted its fastest quarterly revenue growth in more than three years, lifted by steady travel demand, higher booking numbers, and improved pricing power. The company also raised its full-year revenue forecast, indicating that annual growth would reach the upper end of its projected 10 per cent to 19 per cent range.
Shares in businesses connected to Elon Musk also managed to rebound after two consecutive sessions of steep losses. Investors had previously sold shares of Tesla and SpaceX because of the billionaire's political ties to defeated Republican candidates and the dependence of both companies on federal government contracts. Tesla shares found additional support on Friday after investors welcomed the electric vehicle maker's decision to end production of its Cybertruck in Texas next year following disappointing sales.
On the losing side, shares of sports betting company DraftKings plunged approximately 20 per cent after its quarterly financial results missed expectations. Healthcare providers also suffered sharp declines, with AMN Healthcare and Artivion dropping under selling pressure following their respective earnings announcements.
The Dow Jones Industrial Average was weighed down throughout the session by losses in traditional retail and consumer goods stocks, which failed to participate in the technology rebound. Significant decliners among the blue-chip index included major retailers Walmart and Home Depot, as well as consumer staples and dining giants Nike and McDonald's.
