The market's surprising reversal, Gap's viral ad, AI regulation and more in Morning Squawk

In a surprising turn of events, stock investors did not enjoy the anticipated bounce following Nvidia's earnings. After a promising start to yesterday's trading session, stocks experienced a steep decline, raising fresh concerns about the artificial intelligence market. The recently released September jobs report revealed a significant increase of 119,000 jobs, far surpassing economists' forecasts. However, the unemployment rate also rose to 4.4%, marking its highest point since 2021. Following this report, the likelihood of a Federal Reserve rate cut in the next meeting appeared slim, as indicated by the CME FedWatch Tool. Yet, this morning brought renewed optimism for a December rate cut after comments from New York Fed President John Williams suggested that there’s potential for further adjustments in interest rates. In retail news, Gap's innovative "Milkshake" advertisement has proven to be a game-changer. The company's "Better in Denim" campaign, featuring the girl group Katseye, has propelled comparable sales up by 5% in the third quarter, surpassing analyst expectations. This positive performance contributed to a 4.5% rise in shares during overnight trading, despite a notable decline in sales for its Athleta brand, which saw an 11% drop. The retail earnings landscape is shaping up, with value-driven retailers gaining traction among consumers across various income levels. This trend has emerged as a key theme in the recent earnings reports, as detailed by CNBC's Melissa Repko. On the regulatory front, the White House is preparing an executive order aimed at streamlining the oversight of artificial intelligence by blocking individual state laws. A draft of the order, which CNBC has obtained, indicates intentions to challenge states legally and prevent federal funding for those that do not adhere to the proposed regulations. This move has garnered support from AI industry leaders who have expressed concerns about a fragmented state-by-state regulatory approach. However, a White House official cautioned that any discussions regarding the draft are purely speculative until an official announcement is made. Additionally, Joby Aviation has initiated legal proceedings against competitor Archer Aviation, alleging that Archer used confidential information taken by a former employee to gain a competitive edge in securing a deal with a real estate developer. Joby claims that George Kivork, its former U.S. state and local policy lead, engaged in corporate espionage. Archer, on the other hand, has dismissed the lawsuit as "baseless" and lacking any merit.