Nasdaq stock index recovers from brutal sell-off

The tech-heavy Nasdaq stock index has made a significant recovery after a brutal sell-off that saw trillions of dollars wiped off stock values globally.

The market rout began in the US on Thursday before spreading to Asian and European markets by Friday. This downturn was partly driven by investor concerns over the implications of the Democrat victory in the midterm elections, which some had feared would slow down artificial intelligence development.

Investors' worries were partially alleviated when new employment figures showed a surprisingly strong addition of 165,000 jobs to the US economy in September. Despite this mixed signal for American markets, tech stocks began to rebound.

As trading opened on Friday, shares in businesses closely linked to AI development started to recover, with chip and semiconductor makers among those that had taken a particularly hard hit on Thursday.

Nvidia's fortunes began to turn around on Friday as its shares opened trading up more than 6% after a brutal day on Thursday.

The company had seen hundreds of billions wiped from its market value when shares plummeted by over 9%, but the recovery was swift and significant.

SpaceX and Tesla, two other tech giants closely associated with AI innovation, also saw their shares bounce back to some extent. SpaceX's stock rose by more than 7% while Tesla's gained nearly 3%.

Meanwhile, chipmakers AMD and Micron were among those that had taken a significant hit on Thursday when they dropped by over 17%, but on Friday, AMD's shares rebounded with an increase of around 12% and Micron saw its stock rise by more than 8%.

The AI industry's recent woes have sparked concerns about the long-term viability of investments in this sector. Some experts argue that the significant sums being poured into artificial intelligence may not yield a satisfactory return on investment.

Tech London Advocates founder Russ Shaw believes the recent election outcome has sent a clear signal for a re-evaluation of the role of AI. He notes that the incoming Congress will focus intensely on this area, which could lead to increased scrutiny and regulation.

Shaw also expresses concerns about the lack of transparency from companies regarding their use of AI. He argues that firms need to be more mindful of their impact on local communities, particularly in terms of energy costs and data centre development.

The US jobs market has shown resilience despite recent market volatility. New figures indicate that employers added 165,000 new positions in October, exceeding expectations and outpacing the average monthly increase.

The unemployment rate in the US has shown a slight decrease, dropping from 4.2% in September to 4.1%. This marks a modest easing of joblessness, but still remains within a narrow range that has persisted since March.

According to the Bureau of Labor Statistics (BLS), significant job growth was observed across various sectors. The professional and business services sector led the way with an addition of 70,000 jobs, followed closely by healthcare with an increase of 42,000 positions. Other notable gains were recorded in transportation and warehousing as well as manufacturing.

The strong job market figures come amidst a backdrop of significant market fluctuations. However, analysts argue that these numbers suggest the US economy remains robust, potentially mitigating concerns about risks to the real economy that have been weighing on markets.