Payroll beat lifts stocks off the lows, but the Nasdaq still logs a fourth straight weekly loss

A blockbuster beat on nonfarm payrolls helped stocks pare a modest amount of the previous day’s historic tech losses on Friday, by strengthening confidence that the economic expansion is thriving¹. AI stocks climbed after trillions of dollars were wiped from market values^3,4.

The rebound did not erase the week. The Nasdaq rebounded from the tech rout but extended its weekly losing streak to four weeks^6,7. The S&P 500 exchange-traded fund fell 2.7% for the week, the Nasdaq fund took the biggest hit and the Dow fund had the smallest decline⁹. The closely watched index was forced back below its 50-day moving average but is holding above its 10-week line for now¹⁰.

In the earlier rout, the S&P 500 and Nasdaq 100 had closed near their lows of -4.4% and -6.4%, respectively².

Why it matters to investors

The selloff has been tied to political and industry worries. Investors had been selling tech shares in part because of concerns that the Democratic election victory would mean slower AI development⁴. Fears of more AI regulation appear to have sparked the selling, though concerns about the industry have been growing for some time⁵. The weekly decline also reflected pressure on neocloud stocks over worries about debt-funded AI spending⁹.

Friday’s jobs data cut the other way, pointing to a strong economy¹. The partial recovery also lifted the fortunes of tech billionaires¹¹.

Some strategists see the drop as an entry point. “This is the place where you should be adding risk over the next two to three weeks,” said Mike Wilson, chief US equity strategist at Morgan Stanley^12,13. The S&P 500 has gained over that period after every midterm election since 1950¹⁴. Those are the views of strategists, not a forecast by this publication.

What to watch

Inflation data come next. Wall Street is looking to the release after the Nasdaq’s fourth straight weekly loss⁸, which follows a warning from IMF Managing Director Kristalina Georgieva about what central banks must take into account⁸.

CoreWeave earnings are also due¹⁰, a test for the neocloud group that weighed on the week⁹. AI leader Nvidia is also in focus as the index tries to hold above its 10-week line¹⁰.

In the UK, traders are digesting the Bank of England’s latest decision to raise interest rates alongside the market volatility³. Whether the rebound in AI stocks⁴ lasts beyond a single session will show if the four-week losing streak⁶ is ending or extending.