Nasdaq rebounds but posts fourth straight weekly decline

Traders working on the floor of the New York Stock Exchange, in New York City, on Nov 6.

NEW YORK - Technology stocks bounced back on Nov 6 from their worst drubbing in more than a year, but the Nasdaq Composite Index posted a fourth consecutive weekly decline as investors sifted for clues about what comes next in the AI trade.

Gains within technology were broadly shared, with the semiconductor index rallying and Nvidia, Advanced Micro Devices and Sandisk rebounding.

The broad revival underscores investor faith in the AI buildout that has driven US stock indexes to dozens of record closes this year, despite a shakeout that began with a US long-term Treasury yield spike in August and the stock volatility of the past month.

“We still think AI is the dominant theme in this bull market,” said Keith Lerner, chief investment officer at Truist Advisory Services in Atlanta. “We are still giving technology the benefit of the doubt.”

The Nasdaq gained 1.09% to 24,579.43 points, while the Dow Jones Industrial Average declined 0.46% to 51,286.21 points.

Lerner said he views the selloff this week, which has taken the Nasdaq into correction territory denoting a 10% decline from its peak a month ago, as likely offering a longer-term buying opportunity for many investors.

“AI has gone on trial several times in this cycle and come away with an innocent verdict,” said Adam Turnquist, chief cross-asset strategist for LPL Financial in Charlotte, North Carolina.

Referring to the US midterm election results that spurred heavy selling in AI stocks, he said, “This week we saw a little bit of a knee-jerk reaction.”

The S&P 500 sectors were mixed, with information technology leading gains and consumer staples and healthcare lagging. The benchmark index headed for its worst week since June.

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

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