Nasdaq rises 2% following 6.4% rout; Fed hike odds hit 76.8%

Nasdaq 100 suffers worst performance since April 2025

On Thursday, the Nasdaq 100 index suffered a record single-day decline of 6.4%, which erased $2.3 trillion in market value, according to Bloomberg. Morningstar reported that this drop was the index's worst performance since the April 2025 trade war selloff and confirmed a technical correction of 10% from its October 6 peak.

The S&P 500 fell 4.4% on Thursday, resulting in a loss of USD 3 trillion in market value, which was its largest drawdown since April 2025. NDTV Profit reported that during Thursday’s trading session, the Dow Jones Industrial Average fell 1.14% to 52,737.2 points, the S&P 500 dropped 3.09% to 7,451.32, and the Nasdaq Composite declined 4.8% to 2,448.

Bloomberg and NDTV Profit reported that concerns that a Democratic sweep in the U.S. elections could lead to stricter regulations on AI infrastructure, potentially hindering growth for data-center suppliers and chipmakers, contributed to the tech stock selloff. Bloomberg also reported that systematic, trend-following investment funds amplified the tech stock selloff.

Global markets face downturn in Asia and Europe

Asian indices suffered on Friday as the South Korean Kospi index fell more than 6%, forcing a temporary trading halt. Memory chip makers SK Hynix and Samsung have dropped 19% and 13% respectively since the election.

Japan’s Nikkei 225 index declined 5.9% on Friday, entering bear market territory. The drop included losses in semiconductor and tech investment stocks such as SoftBank Group.

The Morningstar Europe Market Index traded down 1.2% on Friday. The region struggled to regain momentum despite a recovery in tech stocks like ASML.

October jobs report and Treasury yields influence market sentiment

A stronger-than-expected October jobs report added 165,000 jobs and an unemployment rate of 4.1%, which constrained equity gains on Friday. Rising Treasury yields limited market performance following this report.

The yield on 10-year US Treasuries increased by 0.04 percentage points to 4.87%. Meanwhile, spot gold reached USD 4,088.

Energy prices traded higher on Friday, with West Texas Intermediate at USD 90.70 per barrel. Brent Oil Futures were priced at USD 97.74 per barrel according to NDTV Profit, while other reports placed them at USD 98 per barrel.

The probability of a Federal Reserve interest rate hike in December rose to 76.8% following the jobs report, according to CME Group’s FedWatch tool.

For now it’s still considered likely, said Reid.

Analysts weigh in on AI investment cycle and market sentiment

Michael Field, Morningstar’s chief European markets strategist, noted that fundamentals remain sound despite the negative sentiment.

Such proof would include slowing AI revenue growth, weakening cloud utilization, or insufficient new usage to absorb capacity.