Chip Stocks Rebound From Session Lows Despite AI Spending and Debt Concerns

Stocks recovered as a sharp drop in the 10-year yield helped offset a much hotter-than-expected inflation report. The tension is that lower yields are providing relief while rising oil prices and concerns about artificial intelligence spending keep pressure on the market. The S&P 500 is holding support, and technology shares recovered strongly from their lows, but those recoveries still need confirmation.

In One Minute

The S&P 500 finished up 0.28%, the Nasdaq gained 0.08%, and semiconductors recovered from an early selloff despite closing down about 1%. Producer prices came in at nearly twice the forecast, but falling Treasury yields helped buyers regain their footing. The opportunity is a near-term recovery in technology, while the risk is that these bounces stall at broken trend lines. Watch whether the major indexes hold support, SMH reclaims its channel midpoint, and Bitcoin moves toward $86,000 rather than continuing to lean on its floor.

The Context

The inflation report added another concern to a market already questioning the scale of artificial intelligence spending and whether some companies can repay their debt. South Korea’s KOSPI fell sharply, and weakness in memory stocks carried into the technology session. Falling yields helped absorb that pressure, but rising oil prices prevented a cleaner relief rally.

Key Developments

The S&P 500 bounced from its rising support line and finished up 0.28%, keeping the broader sideways range intact. Prices have been moving within that range since August, and the weekly chart still looks like consolidation rather than a decisive breakdown. The head and shoulders breakdown remains part of the picture, but the immediate bullish case holds while daily closes remain above the rising support line.

The inverse head and shoulders setup is no longer active, so the remaining upside case depends on support holding and prices clearing the consolidation range. The SPY discussion still points toward $800 as a major psychological objective. I want to see a daily close above resistance before treating that next leg higher as the stronger setup.

The Nasdaq recovered to finish up 0.08% and closed above the declining trend line associated with its earlier breakout to record highs. That is encouraging, but it has also closed below a separate rising trend line for two sessions. That rising line connects pivots dating back to the March lows, and a bounce toward it near 27,000 points remains the immediate possibility.

QQQ also closed above its breakout trend line and the neckline of its inverse head and shoulders pattern. Prices briefly tested below the neckline before recovering, showing that buyers defended it during the session. As long as that neckline holds, the measured move toward $806 remains active, with the end of the week providing an important test before more technology earnings next week.

The 10-year yield fell sharply after the previous session left a large upper wick on the daily candle. Reversal patterns on both the daily and weekly charts had already pointed toward a possible move lower, and a return toward 5.021% now looks increasingly possible in the coming days. That decline eased pressure on stocks and gold, although continued strength in oil could pull yields higher again and keep them consolidating within their existing range.

SMH finished down about 1%, but the recovery changed the immediate character of the chart. It had closed below the 0.618 Fibonacci retracement in the previous session, leaving the 0.786 retracement and the channel’s 50% area as potential support. Instead, it opened well below that midpoint, sold off for roughly 30 minutes, and then recovered toward the top of its daily range.

Since around October 6, the decline had repeatedly produced bear flags, brief sideways pauses followed by another move lower. This session broke that rhythm, with prices recovering toward the channel midpoint rather than remaining near the lows. If SMH gets back above that 50% area, the next potential destination is the upper channel boundary near $597.69.

Micron (MU) finished higher after six straight declining sessions, despite heavy pressure across memory stocks. It traded down to around $860, filled the gap at $868.52, and then rebounded strongly. Like SMH, it finished near the upper end of its session rather than leaving another weak consolidation near the lows.

The complication is that Micron has broken below a rising parallel channel. A recovery toward that broken channel could meet resistance between $1,035 and $1,070, depending on when prices reach it, and then fade. A stronger move back inside the channel would change that picture, so the quality of this rebound matters.

The lower support area has also already been approached, which could weaken it on another test unless the recovery creates meaningful distance. A close near the lows followed by a further decline or brief break through that support would have offered a different setup for a bounce toward the broken channel. With prices now between those areas, I want to see how the rally develops before choosing the next trade.

Ericsson rallied after earnings per share beat expectations by 22%, and revenue beat expectations by 6.8%. The advance began near the bottom of a parallel channel dating back to April 2024, where buyers have repeatedly stepped in for more than two years. The shares closed at the session high, and the next requirement is a close above that candle in the following session.

If that confirmation arrives, a pullback toward the horizontal line drawn from the August 25 pivot high could offer a buying opportunity. The first upside reference is $10.84, followed by earlier pivot lows around $11. Clearing those barriers would open more room toward the channel’s 50% area.

Gold bounced as falling yields relieved some pressure, but it remains in bearish consolidation directly above support. That keeps the recovery vulnerable to another rise in yields. If support breaks, the earlier lows near $3,900 come back into view.

Silver remains weaker because it failed to recover into its previous bearish consolidation range. The 50% area of its parallel channel, which dates back to February 2008, is now near-term resistance after prices surged above the channel’s upper boundary and then reversed sharply. The active head and shoulders pattern still points toward $53.26.

The broader area from $53 down to a brief move below $50 is where I expect stronger buying interest if selling continues. That downside objective remains the focus before a potential recovery toward the declining trend line. For now, silver has more technical damage to repair than gold.

US oil moved higher while yields fell, leaving the market caught between relief from lower yields and pressure from rising energy prices. If oil keeps advancing, the next level is $102.81 at the channel’s 50% area. Continued strength could also pull the 10-year yield higher again.

Natural gas reached the lower boundary of its parallel channel after breaking above a declining trend line. Unlike earlier advances, this breakout has not yet produced a meaningful retracement. The daily RSI was above 70 in the previous session, showing that momentum had become stretched and supporting the expectation of a pause or pullback.

The measured move target remains $3.89, while a more conservative pullback opportunity sits near $3.26 at the declining trend line. A more aggressive approach would involve buying earlier pivot highs with room to add if prices fall further. Natural gas can move sharply in either direction, so the supplied setup calls for light positioning and patience rather than chasing the initial advance.

Zillow bounced as the sharp decline in the 10-year yield gave buyers a reason to return. Its financials are not that bad, and earnings are approaching in early November, just a couple of weeks away. Before then, a stronger recovery could bring prices toward $36.52.

That level aligns with a trend line connecting the March 2020 low and the October 2022 low. Prices have already broken below it, returned to test it, and been rejected, while the line also served as support on earlier occasions. Zillow needs to reclaim that barrier to support a more durable move higher.

Nike recovered after falling to $32.14 and briefly breaking below the parallel channel that has contained prices since September 2022. It is now back inside that channel and moving away from its lower boundary. If prices pull back, that boundary near $34.17 becomes potential support.

The first resistance is $40, less than $3 above the price discussed, followed by the significant Fibonacci retracement at $43.34. Beyond that, the major declining trend line near $46.16 remains the key medium-term barrier. Weak sales in China contributed to this year’s decline, so an improvement there could help change the outlook.

The longer-term case rests on buying after a substantial decline and allowing time for a recovery. The move back inside the channel supports that setup, but it does not remove the resistance levels overhead. I am watching the trading opportunity and the price structure rather than whether the company is a personal favorite.

Bitcoin gained 0.87% and remains above the horizontal support line tied to its November 2025 pivot low. That level stopped two earlier rallies before prices broke through on the third attempt and established themselves above it. Holding that former resistance as support keeps the immediate constructive case alive.

What concerns me is how much time Bitcoin is spending close to that floor. Repeated tests increase the risk that support eventually gives way, especially when buyers cannot move prices away from it. Bitcoin has also broken below a rising trend line connecting recent pivots, showing that the current upward trend has weakened.

That does not prevent Bitcoin from reclaiming the line or recovering toward the upper end of its consolidation. The improvement I want to see is a move toward $86,000 sooner rather than later. Creating distance from support would strengthen the prospects for further upside, while continued consolidation against the floor leaves the breakdown risk unresolved.

Why It Matters

The market is responding to competing forces rather than one clear signal. Falling yields helped stocks, gold, and Zillow recover, while rising oil could undermine that relief by pushing yields higher again. Within technology, the strong finishes in SMH and Micron suggest some buyers are willing to look past spending concerns after substantial declines.

The distinction now is between holding support and repairing a broken trend. The S&P 500 is defending its range, while the Nasdaq and Micron still face previously broken trend lines overhead. Bitcoin faces a similar need for stronger separation from support before its recovery becomes more convincing.

Key Details

Bull Case

The constructive case starts with the S&P 500 holding its rising support line and QQQ defending its neckline. The Nasdaq could bounce toward 27,000 points, while SMH reclaiming its midpoint would support a move toward $597.69. Micron’s strong recovery becomes more convincing if it can regain its broken channel rather than stall beneath it.

Ericsson needs confirmation above its latest candle, Zillow needs to reclaim its major trend line, and Nike needs to work through its resistance levels. Natural gas retains its $3.89 objective if a pullback produces the anticipated opportunity near former resistance. Bitcoin strengthens its setup by moving toward $86,000 and creating distance from its repeatedly tested floor.

Bear Case

A daily close below the S&P 500’s rising support line would weaken the broader consolidation setup. The Nasdaq remains below its March rising trend line, and Micron could face renewed selling between $1,035 and $1,070. Concerns about artificial intelligence spending and debt repayment remain unresolved despite the recovery.

Rising oil could push yields higher again, reducing the relief that helped stocks and gold. Gold remains vulnerable to a support break toward $3,900, while silver’s head and shoulders target remains $53.26. Bitcoin’s repeated support tests and broken rising trend line leave it exposed if buyers cannot generate a stronger recovery.

What to Watch Next

Into the end of the week, watch the S&P 500’s daily close against support and whether QQQ holds its neckline ahead of more technology earnings next week. Ericsson needs a close above its latest candle, while Micron’s next recovery test is the broken channel. Zillow’s early November earnings remain the next company catalyst in its discussion.

For commodities, watch oil’s progress toward $102.81, the yield move toward 5.021%, and whether natural gas finally retraces toward $3.26. Gold and silver still need to show how they respond around their existing support and resistance structures. For Bitcoin, the immediate test is whether buyers can move prices toward $86,000 instead of allowing another prolonged test of the floor.

Bottom Line

Falling yields helped the market recover, but rising oil and unresolved technology spending concerns keep that relief conditional. The strongest evidence now would be support holding and recoveries clearing the trend lines that still stand overhead. Bitcoin also needs distance from its floor, while natural gas needs the pullback its setup has been waiting for. Let those conditions develop before treating a bounce as the next sustained move.