A blowout jobs report lifted investor sentiment a day after a sharp sell-off in technology shares led stocks to their worst day since April 2025.
U.S. employers added a surprising 165,000 jobs in October, easily topping economists' mean forecast for 59,000, that stretched across many sectors. Prior months of job gains were also revised higher, and the jobless rate ticked down a tenth to 4.1%. Wages rose by 0.4% for a 3.1% annual increase.
The strong jobs report reminded investors that despite concerns that the Democratic sweep in the midterm election may mean a slowdown in data center and artificial intelligence growth, the economy remains on solid footing, some economists said.
"The resilience evident in today’s jobs report is particularly reassuring
after yesterday’s sharp tech-led sell-off," said Seema Shah, chief global strategist at Principal Asset Management, in a commentary. "It reinforces the distinction between a market correction and an economic downturn: an AI-led market correction does not have to translate into a broader deterioration in economic fundamentals. Strong fundamentals may not prevent further bouts of volatility, but they should ultimately provide an anchor for markets and help steady sentiment even as investors continue to grapple with concerns around AI and tech."
Around 1 p.m. ET, the blue-chip Dow was just 0.12%, or 60.72 points, lower, at 51,462.34, while the broad S&P 500 edged up 0.57%, or 41.72 points, to 7,395.45. The tech-laden Nasdaq rose 1.21%, or 293.42 points, to 24,608.418.
What about inflation?
With such a strong job market, the Federal Reserve will have to raise rates to keep inflation from heating up, analysts said. But markets have shown resilience, some noted.
"The economy is doing well," said Chris Zaccarelli, chief investment officer at Northlight Asset Management, in an email. "It is growing at 3.4%, corporate earnings are up more than 25% year-over-year – and it can handle higher oil prices and higher interest rates. Despite an oil shock and a Federal Reserve that is raising rates, albeit slowly, the unemployment rate actually dropped and the 4.1% level is at or close to full employment."
Will technology stocks rebound?
Most analysts said the data center and AI buildout may slow, but it's not dead.
OpenAI Chief Financial Officer Sarah Friar told CNBC that the company will continue to invest in artificial intelligence infrastructure despite the results of the midterm elections.
Google also said it plans to invest $17 billion in a data center in Wyoming.
"There will be a temporary hiccup," said Nancy Tengler, chief executive and chief investment officer at Laffer Tengler Investments, in market notes. "Let's not forget there are still a few red states left. If the blue states make it too difficult, data centers not only employ people, but they also pay a lot in taxes. I think you'll see the left move more to the center on this issue. We'll just have deals where they bring their own power, cool the facilities and reuse water."
She said "data centers will get built. It's just going to be a question of where. So use this as an opportunity to pick them up at much more attractive prices."
Increased regulation "tends to favor the incumbents," said Janus Henderson Head of Technology Research & Portfolio Manager Denny Fish, in a commentary. So stick with larger, better capitalized, known companies.
"Large companies typically have the financial firepower and staff to withstand and comply with more rigorous oversight," Fish said. "We believe this would be the case should the data center buildout face such headwinds. Hyperscalers, with their existing torrent of cash flows from software sales, cloud services, and digital advertising, would likely be advantaged over AI-centric neocloud providers."
Medora Lee is a money, markets and personal finance reporter at USA TODAY. You can reach her at mjlee@usatoday.com and subscribe to our free Daily Money newsletter for personal finance tips and business news every Monday through Friday morning.
This article originally appeared on USA TODAY: Blowout jobs report rescues stocks from brutal tech rout
