US STOCKS-Nasdaq rebounds as chip stocks recover from steep losses

By Shashwat Chauhan and Utkarsh Hathi

Nov 6 (Reuters) - The tech-heavy Nasdaq rose on Friday as chip stocks bounced off heavy losses posted in the previous session on fears that a Democrats-led Congress could result in tougher AI regulation, even as the jobs report raised interest-rate hike concerns.

The Nasdaq Composite .IXIC logged its steepest one-day decline in 19 months on Thursday, confirming it had entered correction territory. The index was also headed for a fourth straight weekly decline.

The selloff followed the Democrats' midterm election victory, including in key data-center states, stoking concerns that AI data-center buildout could slow. Optimism over the sector's rapid growth had propelled stock markets to record highs this year.

"It's just that yesterday's reaction seemed pretty pronounced and people are kind of just stepping in a bit," said Thomas Shipp, vice president of equity research at LPL Financial.

Megacap and growth stocks were mixed. Nvidia NVDA.O added 3.8%, after suffering its worst day since January 2025 when the emergence of low-cost Chinese AI model DeepSeek had rattled Wall Street.

Chip stocks staged a recovery, with the broader semiconductor index .SOX rising 4.2%, after plunging over 12% in the previous session. AMD AMD.O, Intel INTC.O and Micron Technology MU.O were up between 6% and 10%.

Meanwhile, US nonfarm payrolls increased more than expected in October and the unemployment rate fell to 4.1%, suggesting the labor market remained resilient.

Traders added to bets that the Fed could hike rates as soon as next month, with a 78% chance of a December move compared with a 70% chance seen earlier.

"Those are strong numbers ... the flip side is what we saw yesterday and how volatility has spiked; will the Fed want to raise interest rates in the face of a market which is teetering?" said Joe Saluzzi, co-head of equity trading at Themis Trading.

At 11:31 a.m. ET, the Dow Jones Industrial Average .DJI held steady at 51,555 points, the S&P 500 .SPX gained 69.32 points, or 0.94%, to 7,423.05 and the Nasdaq Composite .IXIC gained 415.39 points, or 1.71%, to 24,730.30.

Six of the 11 S&P 500 sectors were trading higher, with information technology .SPLRCT leading gains. Consumer staples .SPLRCS and healthcare .SPXHC were the laggards.

The benchmark was on pace for its worst week since June.

Data-center operators IREN IREN.O and Applied Digital APLD.O, neoclouds CoreWeave CRWV.O and Nebius Group NBIS.O and AI-exposed utilities and equipment suppliers such as GE Vernova GEV.N and Constellation Energy CEG.O recovered from deep losses in the last session.

Elon Musk-led Tesla TSLA.O and SpaceX SPCX.O were also up 5% and 6%, respectively, after dropping sharply in the last two sessions.

Bucking the trend, Microchip MCHP.O slid 12.1% and was heading for its steepest weekly fall since December 2000, after the chip supplier forecast third-quarter adjusted gross margin below estimates.

A jump in crude oil prices on Thursday had also pressured equities over concerns of energy-fueled inflation and prospects of higher interest rates by global central banks. Brent crude futures were slightly lower on Friday.

Among other stock movers, software firm Atlassian TEAM.O dropped 15.4% after reporting first-quarter results. Airbnb ABNB.O climbed 10.4% after the vacation rental platform raised its full-year 2026 revenue growth forecast.