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Shares in artificial intelligence and technology firms started to climb following an enormous sell-off that wiped trillions of dollars off stock values. The tech-heavy Nasdaq stock index opened higher following a market rout that began in the US on Thursday before spreading to Asian and European markets into Friday.
Tech Sector Rebound After Market Rout
On Thursday, businesses closely linked to artificial intelligence development took a heavy hit on stock markets, particularly chip and semiconductor makers. However, the Nasdaq Composite opened up 1.23% on Friday and continued to gain in early trading, reversing some of its previous 5.5% fall. The S&P 500 opened up slightly and gained, while the Dow Jones Industrial Average opened down slightly and then stayed flat.
Nvidia, which lost hundreds of billions in market value on Thursday after shares slid more than 9%, began Friday trading up more than 6%. SpaceX and Tesla shares saw mixed gains, rising more than 7% and nearly 3% respectively. Chipmakers AMD and Micron both dropped by more than 17% on Thursday, but AMD shares rose about 12% on Friday while Micron was up more than 8%.
Political Shifts and AI Regulations
The market fluctuations followed a sweeping Democrat victory in the midterm elections. Several Democrats campaigned for new rules and regulations for artificial intelligence and data centres, and the party won control of both houses of Congress as well as key contests in states involved in the AI data centre race. US President Donald Trump reiterated his support for what he calls “super intelligence,” stating that only “foolish leadership” would “say no to the riches they bring.”
Additional concerns have emerged over whether the massive amounts of money spent on artificial intelligence will yield financial returns. Russ Shaw, founder of global tech advocacy firm Tech London Advocates, told BBC Business Today that the election result sent a message that a rethink on AI was necessary. He noted that the incoming Congress will focus on the technology dramatically, and argued that companies must communicate its benefits more effectively. He pointed out that communities are watching firms build data centres while their local energy costs rise, meaning these companies “have to be better neighbours.”
Employment Data Boosts Market Sentiment
As traders digested the fallout from the midterms and the plunge in AI stocks, the latest US employment figures offered a positive counterweight. US employers added 165,000 new jobs in October, well above the average monthly increase and more than double what analysts had expected. The overall unemployment rate eased slightly to 4.1% from 4.2% in September, having remained in a narrow range of 4.1% to 4.3% since March, according to the Bureau of Labor Statistics.
The job growth was led by the professional and business services sector, which added 70,000 positions, followed by healthcare with 42,000 additions, alongside gains in transportation, warehousing, and manufacturing. Neil Birrell, chief investment officer at investment firm Premier Miton, stated that while the jobs figures may have felt secondary to the market movements, they remained important. He explained that the US economy is running hard, suggesting that the risks worrying markets may not pose as severe a threat to the real economy as feared.
