Wall Street stocks rebounded on Friday, recovering from a sharp selloff triggered by fears of stricter U.S. regulations for the AI industry following Democratic election victories. The S&P 500 and Nasdaq led the rally, with technology, communication services, and consumer discretionary stocks driving gains. The Dow, however, edged lower. All three indexes were still on track for weekly losses after a brutal prior session.
The Philadelphia Semiconductor Index surged 4.2 percent, rebounding from its biggest one-day drop since April 2025. Nvidia rose three percent after its worst day since January 2025, while other chipmakers like AMD, Intel, and Micron Technology climbed between 5.5 percent and 10 percent. Tesla and SpaceX also saw gains of two and eight percent, respectively, following earlier losses.
Gerry Sparrow, president and portfolio manager at Sparrow Capital Management, attributed the volatility to uncertainty over a shift from Republican-led to Democratic-led governance at federal, state, and local levels. Texas’ Democratic governor-elect Gina Hinojosa announced plans for new laws to limit the buildup of data centers, adding to investor jitters. The AI sector has also faced pressure from concerns over the high costs of infrastructure limiting future returns.
Globally, markets showed mixed reactions. Europe’s STOXX 600 lost one percent, while Japan’s Nikkei and South Korea’s KOSPI each slumped about six percent. The MSCI All-World index fell 0.52 percent, and Asia-Pacific shares outside Japan dropped three percent. U.S. nonfarm payrolls showed a stronger-than-expected 165,000 job pickup, with annual wage growth holding at 3.1 percent. The dollar rose against major currencies, and Brent crude prices inched back toward US$100 a barrel.