Thursday's AI sell-off talked traders out of a December rate hike. Friday's jobs report talked them right back in.

Chip stocks had their second-worst day since 1994 on Thursday. Polymarket's chances of a quarter-point hike at the Fed's Dec. 9 meeting sank to about 64% that day, from 81% the day before. Then employers added 165,000 jobs in October, more than double the forecast, and the probability climbed back to about 78%.

That's great news for anyone hunting for a job. It's less great for anyone hoping the Fed would ride to the rescue of a bruised and battered stock market.

The report was strong almost everywhere you looked. The unemployment rate slipped, the prior two months were revised higher, and paychecks grew faster than expected.

"With a number like this, you can put aside labor as a concern," Interactive Brokers chief strategist Steve Sosnick said on Yahoo Finance's "The 8:30."

That leaves the Fed staring at the other half of its job: inflation.

Polymarket, Yahoo Finance

The bar for a healthy job market is lower than it used to be. Baby boomers are retiring, and immigration has slowed, so RSM chief economist Joe Brusuelas figures the economy needs only about 35,000 new jobs per month to remain stable. He told Yahoo Finance's "Market Hang" he expects "job growth at more than three times what's necessary to stabilize the labor market."

The Fed may not mind a little pain

Surprisingly, a cooler stock market might be part of the cure.

Wealthy households have done a lot of the spending lately, fueled by their stock gains, a pattern economists call the wealth effect. Take some air out of stocks, and some of that spending cools too.

"To the extent that higher rates also take a little steam off of equity prices, that can cool inflation by the most affluent households," KPMG chief economist Diane Swonk said on "The 8:30."

That reliance on the rich cuts both ways. Swonk wrote on X that the economy is now more dependent on wealthy households "carrying economic gains" than it was when the last tech bubble burst. The S&P 500 has more than doubled in four years, she noted, with Goldman Sachs crediting AI-related stocks for about 45% of that gain.

Her concern isn't that the Fed pops a bubble. It's that "bubbles accompany tech innovations." Her base case is more benign, a pullback that "knocks speculators out but doesn't collapse the entire market."

Politico's Victoria Guida floated a gentler path on Yahoo Finance's "Market Hang." She recommends slowing the AI build-out through regulation, "rather than having the Fed take a huge sledgehammer and have to raise rates a lot in order to cool some of this down."