Shares in artificial intelligence and technology companies recovered on Friday after a heavy sell-off erased trillions of dollars in equity value. The tech-focused Nasdaq opened higher after a rout that began in the United States on Thursday and then spread to Asian and European markets.
Investors had been dumping technology stocks partly over fears that the Democrats’ victory in the midterm elections would slow the development of artificial intelligence. Economic data released the same morning added to a mixed picture for American markets.
Tech shares rebound after Thursday’s heavy losses
Businesses closely tied to AI development were hit hardest on Thursday, particularly chipmakers and semiconductor producers. By lunchtime on Friday, the Nasdaq Composite had climbed to about 1.7% higher, recovering part of its 5.5% drop.
Also read: US stocks slide as AI shares plunge after midterm vote · Global stocks fall on AI slowdown fears after US midterms
The S&P 500, which tracks the share prices of the largest publicly traded US companies, was about 0.9% higher by midday. The Dow Jones Industrial Average opened slightly lower before moving into positive territory.
Nvidia had lost hundreds of billions of dollars in market value on Thursday, when its shares slid more than 9%. The company’s stock began Friday up more than 6% but finished the session around 4% higher. SpaceX and Tesla, which also suffered on Thursday, posted mixed gains of more than 6% and nearly 5%, respectively.
Chipmakers AMD and Micron each fell by more than 17% on Thursday. AMD shares rose about 12% on Friday, while Micron gained more than 8%.
Midterm elections and concerns over AI regulation
The market swings followed a sweeping Democratic win in the midterm elections. Several Democrats had campaigned for new rules on artificial intelligence and data centres, and the party has since taken control of both houses of Congress, along with key contests in states that have been part of the AI data centre push.
US President Donald Trump on Friday restated his support for what he calls “super intelligence”, saying only “foolish leadership” would “say no to the riches they bring”. Separately, there are growing doubts over whether the huge sums being spent on AI will eventually pay off.
Russ Shaw, founder of the global tech advocacy firm Tech London Advocates, said the election result signalled that a rethink on AI was needed. “The incoming Congress is going to really focus on AI in a very dramatic way,” he told the ‘s Business Today programme. He said AI companies were not explaining the benefits of the technology well, particularly in the US. He added that residents watching data centres go up in their areas, while their own energy bills rise, expect those firms to “be better neighbours”.
US jobs data and weaker markets across Asia and Europe
US employers added 165,000 new jobs, a figure that beat expectations and was more than double what analysts had forecast. The unemployment rate, which measures people out of work but actively seeking employment, eased slightly to 4.1% from 4.2%. The Bureau of Labor Statistics said the rate has stayed within a narrow range of 4.1% to 4.3% since March.
Neil Birrell, chief investment officer at Premier Miton, said the jobs numbers were still important despite the focus on market moves. “The US economy is running hard which may mean the risks the markets are worrying about at the moment are not such a risk to the real economy as is being feared,” he said.
Elsewhere, markets fared worse. South Korea’s Kospi closed down 6% on Friday, and shares in chipmaker SK Hynix fell more than 10%. In Europe, the main indexes in Germany, France and Spain ended the day lower. In the UK, the FTSE 100, which tracks the largest companies on the London Stock Exchange, dropped 1.01%. UK traders were also weighing the Bank of England’s decision to raise interest rates, along with a signal that another increase could come to curb rising prices.
Dan Coatsworth, head of markets at AJ Bell, described it as a brutal week for markets and said the key question was whether the rally in the S&P 500 and Nasdaq would hold. “While no-one knows what happens next, it’s clear that we’ve just seen a significant shift in market sentiment,” he said. He added that “next week could give a clearer indication of whether the tech trade is going down the pan or fighting back.”
