Wall Street rebounds on AI tech bargain hunting

Wall Street rebounded Friday on bargain hunting in AI-related technology stocks, a day after a sharp selloff.

The tech-heavy NASDAQ Composite rose 264.43 points, or 1.09 percent, to close at 24,579.42.

The S&P 500 gained 23.13 points, or 0.31 percent, to finish at 7,376.86. The Dow Jones Industrial Average fell 237.33 points, or 0.46 percent, to 51,285.73.

Technology stocks had plunged the previous day on fears of tighter AI regulation following a sweeping Democratic victory in the US midterm elections — a wave widely dubbed a "blue tsunami." Semiconductor shares led the bargain-hunting rebound.

Nvidia rose 2.78 percent, AMD surged 11.04 percent and Micron climbed 5.12 percent, with major semiconductor stocks advancing across the board.

The Philadelphia Semiconductor Index jumped 4.2 percent on the day.

"We still view AI as the key theme driving this bull market," said Keith Lerner, chief investment officer at Truist Advisory Services. "We remain constructive on technology stocks."

Despite the rebound, both NASDAQ and the S&P 500 posted weekly losses for a fourth consecutive week. NASDAQ fell roughly 3.4 percent for the week.

"Concerns that AI regulation could tighten following the Democrats' midterm landslide, along with skepticism about AI investment spending, continue to weigh on the sector," said Fawad Razaqzada, analyst at StoneX Trading and Forex.com.

Strong US employment data released that day also appeared to limit the market's gains.

The US Department of Labor reported that nonfarm payrolls rose by 165,000 in October from the previous month, exceeding market expectations. The unemployment rate also edged down to 4.1 percent from the prior month.

The jobs data is expected to reinforce the case for a Federal Reserve interest rate hike in December.

According to the CME FedWatch tool, the probability of a December rate hike implied by interest rate futures rose to 75 percent from about 70 percent before the employment report.

US government bond yields also climbed as expectations for a Fed rate hike strengthened.

The 10-year Treasury yield settled at around 4.86 percent, while the 2-year yield — more sensitive to monetary policy — closed at around 4.52 percent.