Wall Street stocks rally after heavy AI-related selloff
Wall Street equities mostly rebounded on Friday, reversing course after trillions of dollars in global market value evaporated due to concerns that Democratic election victories this week would lead to stricter U.S. regulations for the AI sector.
The S&P 500 and the Nasdaq finished the session higher, bolstered by gains in technology, communication services, and industrial stocks. The Dow, however, ended in the red. All three major indexes recorded weekly losses following a sharp selloff during the previous session.
The Dow Jones Industrial Average declined 0.46%, while the S&P 500 climbed 0.31% and the Nasdaq Composite rose 1.1%.
The Philadelphia Semiconductor Index jumped 4.2% after suffering its steepest single-day decline since April 2025. Nvidia shares climbed nearly 3% following their worst performance since January 2025, when the emergence of the low-cost Chinese AI model DeepSeek rattled markets.
Other major chipmakers, including AMD, Intel, and Micron Technology, saw gains between 5% and 11%. Shares of Elon Musk’s Tesla and SpaceX also rose 4% and nearly 9%, respectively, recovering from losses earlier in the week.
“Most of the disruption of the AI buildout will not probably occur but it’s just the uncertainty of the change in government from Republican-led to Democratic-led, not only at the federal level but the state, local levels,” said Gerry Sparrow, president and portfolio manager at Sparrow Capital Management.
“That’s causing some disruption in the investors … The volatility around <a
Texas’ Democratic Governor-elect Gina Hinojosa stated on Thursday that the state—which already hosts a significant portion of U.S. data centers—plans to introduce new legislation to protect local communities from further rapid expansion.
These anxieties are impacting an AI trade already under pressure from concerns that the immense costs associated with data centers and infrastructure will constrain future returns, triggering margin calls and unsettling both retail investors and hedge funds.
The market rebound stood in stark contrast to international performance. Europe’s STOXX 600 fell 1%. In Asia, Japan’s Nikkei and South Korea’s KOSPI both dropped approximately 6%. For the Nikkei, it marked the largest one-day decline since the U.S. President Donald Trump “Liberation Day” trade tariff panic of April 2025.
The MSCI All-World index dipped 0.68%, while MSCI’s broadest index of Asia-Pacific shares outside Japan retreated nearly 3%.
