GLOBAL MARKETS-Wall Street stocks in relief rally after heavy AI-related selloff
By Chibuike Oguh and Marc Jones
NEW YORK/LONDON, Nov 6 (Reuters) - Wall Street equities mostly rallied on Friday, reversing course after trillions of dollars of world stock market value was wiped out over fears that Democratic election victories this week would bring tighter US regulations for the AI industry.
Benchmark S&P 500 and the Nasdaq were trading higher with technology, communication services and consumer discretionary stocks driving gains. The Dow edged lower on the day. All three indexes were on track for weekly losses following a brutal selloff in the prior session.
The Dow Jones Industrial Average .DJI was down 0.08%, the S&P 500 .SPX rose 0.61%, and the Nasdaq Composite .IXIC gained 1.1%.
Philadelphia Semiconductor Index .SOX was up 4% after slumping to its biggest one-day drop since April 2025. Nvidia NVDA.O rose 4%, after suffering its worst day since January 2025, when the emergence of low-cost Chinese AI model DeepSeek hammered markets.
Other heavyweight chipmakers, including AMD AMD.O, Intel INTC.O, Broadcom AVGO.O and Micron Technology MU.O, were up between 2% and 10%, while Elon Musk's Tesla TSLA.O and SpaceX SPCX.O were also up 5% and 7% respectively after losses earlier this 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 expectations of investors... The volatility around elections or any political event, whether it be war or terrorist attack, is always going to disrupt the market."
Texas' Democratic governor-elect Gina Hinojosa said on Thursday that the state — which already has a large share of US data centres — will introduce new laws to protect local communities from their further mass buildup.
The jitters are hitting an AI trade already under pressure from fears that the massive cost of the data centres and other infrastructure will limit future returns, spurring margin calls and spooking retail investors and hedge funds alike.
RIPPLE EFFECT
The bounces were in stark contrast with market action in the rest of the world. Europe's STOXX 600 .STOXX lost 1.36%. In Asia, Japan's Nikkei .N225 and South Korea's KOSPI .KS11 both slumped about 6%. For the Nikkei — just like Wall Street the previous day — it was the biggest one-day drop since US President Donald Trump's "Liberation Day" trade tariff panic of April 2025.
Taiwan's benchmark .TWII plunged more than 8% at one point, before cutting losses as authorities scrambled to stem the selling.
The MSCI All-World index .MIWD00000PUS fell 0.28% while MSCI's broadest index of Asia-Pacific shares outside Japan .MISX00000PUS lost nearly 3%.
https://www.reuters.com/graphics/AI-STOCKS/zjpqlrjqnvx/chart.png
PAYROLLS BEAT FORECASTS
The strain on equities meant the US dollar, Japanese yen and Swiss franc all lured safe-haven flows, although the rally in government bonds took a breather.FRX/
The yield on the benchmark US 10-year Treasury note ticked up to 4.86%, having dropped to its lowest level since September 9 overnight.
US nonfarm payrolls, usually one of the most-focused on pieces of data, but largely overshadowed by the tech drama, showed a stronger-than-expected 165,000 pickup in jobs.
An anticipated slowdown in annual wage growth to below 3% for the first time in nearly 5-1/2 years did not materialise either as it came in at 3.1%.
Brent crude prices tiptoed back up towards $100 a barrel, but are still set for their biggest weekly drop since 2020 on hopes the midterms' results might prompt Trump to de-escalate the Iran war.
Spot gold fell 0.80% to $4,055.09.