The week the AI trade cracked: a correction Thursday, a bounce Friday, and jobs that ran hot

Explain terms

The week in one paragraph

The week turned on Washington and AI. Democrats won both chambers of Congress on Tuesday, and Wednesday's rally sent the Dow up 1,569 points. Then AI and chip stocks broke Thursday: the S&P 500 fell 4.36% and the Nasdaq Composite fell 5.52%, closing more than 10% below its Oct. 6 record, the usual definition of a correction. Friday brought a partial bounce: the S&P 500 closed up 0.31% at 7,376.86 and the Nasdaq up 1.09% at 24,579.42, while the Dow slipped 0.46% to 51,285.73, per Yahoo Finance. In between, the October jobs report came in far above forecasts.

Our read

This was the week the market stopped paying for AI on faith. The midterms changed the politics around AI data centers, and the most crowded trade in the market took the hit all at once. Friday's bounce was relief, not a verdict: the same strong jobs report that says the economy is fine also keeps a December rate hike on the table, and that's the pressure tech feels most.

The biggest moves

Day	S&P 500	Nasdaq Composite	What drove it
Mon Nov 2	-0.5%	-1.1%	AI and chip stocks slid again
Tue Nov 3	+0.4%	+0.8%	Chipmakers bounced
Wed Nov 4	+1.6%	+1.4%	Midterm rally; best S&P day in three months
Thu Nov 5	-4.36%	-5.52%	AI rout; Nasdaq closed in a correction
Fri Nov 6	+0.31%	+1.09%	Chip rebound after a hot jobs report

Monday–Thursday moves are from our Close Briefs (AP and Reuters); Friday's from Yahoo Finance's closing quotes. Reuters said Friday morning the Nasdaq was on track for a fourth straight weekly decline and the S&P 500 energy index for a weekly drop of more than 11%.

The week's breaking news

The Nasdaq correction (Thursday). We reported Thursday that chip stocks were leading a broad sell-off; the Nasdaq closed 5.52% lower, in correction territory, and the S&P 500 fell 4.36% (our Breaking Brief). Friday, chip stocks recovered part of the drop: the semiconductor index rose 4.6% by mid-morning after falling more than 12% Thursday, and Nvidia rose 5.6%, Reuters reported. One green day doesn't undo a correction. What to watch is whether buyers keep showing up for chips next week, with inflation data in the way.

The midterms (Wednesday). Our Breaking Brief on Wednesday covered the market reaction to Democrats winning both chambers (our Breaking Brief). Reuters tied Thursday's AI sell-off partly to fears that a Democratic-led Congress could bring tougher AI regulation and slow the build-out of AI data centers.

What the data said

The economy added 165,000 jobs in October, far above the 65,000 economists expected in a Reuters poll. Unemployment fell to 4.1% from 4.2%, and average hourly pay rose 0.4% for the month, against 0.3% expected, BLS reported. Traders put the chance of a December Fed rate hike at 78%, up from 70% before the report, Reuters reported. "Those are strong numbers and normally that would say that the Fed would have to be more on the hawkish side."^{Joe Saluzzi, Themis Trading}

Historical data today, and the 5 before it

Released	Actual vs expected	Surprise	S&P 500	Nasdaq	Gold
TodayFri, Nov 6, 2026Oct 2026	+165K vs +65K	Above	not confirmed	not confirmed	not confirmed
Fri, Oct 2, 2026Sep 2026	+29K vs +90K	Below	+0.7%	+1.14%	Spot -0.8% to -1.1%
Fri, Sep 4, 2026Aug 2026	+162K vs +56K	Above	-0.38%	-0.29%	Spot -0.9% to $4432.58
Fri, Aug 7, 2026Jul 2026	-23K vs not confirmed	not confirmed	+0.6%	not confirmed	Spot +2.4% to $4342.81
Thu, Jul 2, 2026Jun 2026	+57K vs +110K	Below	0.0%	-0.80%	Spot +2.2% to $4,116.54
Fri, Jun 5, 2026May 2026	+172K vs +85K	Above	-2.64%	-4.18%	Spot -3.4% to -3.6%

What happened, not what will. Closing moves for the day; sources on each row.Full history →

Why this report mattersChapter 4, Everyone spends →Chapter 8, Markets react →

Gold

Gold slipped Friday: spot gold traded near $4,050.95 in early U.S. trading, down 0.89% after the jobs report, Kitco reported, and gold futures ended the day near $4,072.60, down about 1%, per Yahoo Finance. The strong payrolls report strengthened the case for a December hike, Kitco said; the 10-year Treasury yield ended near 4.86%, per Yahoo Finance. Gold's week tells the story of its two drivers fighting: it rose on fear and fiscal worries after the midterms, then gave some back Friday as higher-for-longer rate bets made a metal that pays no interest less appealing.

Lessons from the record

Expected: about 65,000 jobs (Reuters poll). Happened: 165,000, a 100,000-job surprise to the upside. A hot jobs number used to be plain good news. With the Fed hiking, it now doubles as rate pressure, which is why stocks didn't celebrate it and gold dipped. The jobs record above shows how the last five reports landed.

Next week at a glance

Day	Time CT	Event
Tue Nov 10	7:30 AM	October CPI, the week's main event
Wed Nov 11	All day	Veterans Day: U.S. bond market closed (SIFMA)
Thu Nov 12	After the close	Cisco quarterly results
Fri Nov 13	7:30 AM	October PPI

Tuesday's report is the second inflation report since the Fed's Sept. 16 hike. Our Dive on what happened the last three times is out Saturday.

What it means for your money

Mortgage rates eased to 7.18% this week, per Freddie Mac, but a December Fed hike is now the market's base case at 78%, per Reuters. For savers, short-term rates near 4% look set to stay; for borrowers, relief isn't here yet; for anyone in an index fund, this was a sharp week for tech-heavy funds, and next week's inflation report is the next test.

The short version (the what and the result)

The Nasdaq fell into a correction Thursday as AI and chip stocks broke after the midterms; Friday brought a partial bounce.
Jobs came in at 165,000 vs 65,000 expected, and December hike odds rose to 78% (Reuters).
Gold slipped Friday as rate-hike bets firmed; the 10-year yield ended near 4.86%.
Next: October CPI on Tuesday at 7:30 AM CT.