Wall Street rebounds as AI stocks recover
U.S. equities turned higher on Thursday after a sharp AI-related pullback the previous day. The S&P 500 gained 0.71% and the Nasdaq Composite rose 1.4%, while technology, communication services and consumer discretionary stocks led the advance. The Dow Jones Industrial Average slipped 0.08%, keeping all three major indexes on track for weekly losses.
The semiconductor sector posted a notable rebound, with the Philadelphia Semiconductor Index climbing 4.2% after its biggest one-day drop since April 2025. Nvidia added 3% following its worst day since January 2025, which had been triggered by the low-cost Chinese AI model DeepSeek. Other chipmakers posted strong gains: AMD, Intel and Micron Technology rose between 5.5% and 10%. Elon Musk-linked companies also recovered, with Tesla up 2% and SpaceX up 8% after earlier weekly losses.
Market commentary linked the volatility to political uncertainty. Gerry Sparrow, president and portfolio manager at Sparrow Capital Management, said the shift from a Republican-led to a Democratic-led government at federal, state and local levels is creating “disruption in the expectations of investors.” Texas Democratic governor-elect Gina Hinojosa announced plans to introduce new laws aimed at protecting communities from the rapid expansion of data centres, a sector already under pressure from cost concerns.
The U.S. rally contrasted with global markets. Europe’s STOXX 600 fell 1%, while Japan’s Nikkei and South Korea’s KOSPI each slipped about 6%, the Nikkei’s drop matching the size of the April 2025 “Liberation Day” tariff panic. The MSCI All-World index declined 0.52% and MSCI’s Asia-Pacific index outside Japan fell 3%.
Economic data showed a stronger-than-expected labor market, with non-farm payrolls increasing by 165,000 jobs. Annual wage growth came in at 3.1%, above the anticipated sub-3% slowdown. The yield on the benchmark 10-year Treasury rose to 4.85% after briefly hitting its lowest level since September 9. The dollar strengthened against major currencies, gaining 0.52% versus the yen and 0.47% versus the Swiss franc, while the euro slipped 0.68% to $1.1142.
Energy and precious metals moved modestly. Brent crude edged toward $100 a barrel but remained on track for its biggest weekly decline since 2020, as investors anticipate that U.S. midterm results could lead to a de-escalation of the Iran conflict. Spot gold fell 0.48% to $4,067.75.
Why it matters
Banking and finance professionals need to gauge how AI-related volatility and political shifts may affect credit risk and investment strategies.
FAQ
Which U.S. indexes rose on the day?
The S&P 500 rose 0.71% and the Nasdaq Composite gained 1.4%.
How did major chipmakers perform?
AMD, Intel and Micron Technology each rose between 5.5% and 10%.
What political factor was cited as causing market disruption?
The transition from a Republican-led to a Democratic-led government at multiple levels was said to create investor uncertainty.
What was the change in the U.S. 10-year Treasury yield?
The yield ticked up to 4.85% after briefly dropping to its lowest level since September 9.
Source: Economic Times Markets. See the original source for full details.
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