Wall Street Rebounds as AI Regulation Fears Volatility

Wall Street witnessed a strong rebound on Friday as US equity markets showed signs of stabilization following a sharp sell-off triggered by concerns over tighter AI regulations and increased scrutiny of data centre investments. The Nasdaq 100 surged 2.3%, while the S&P 500 gained 1%, recovering from Thursday’s steep decline, when the Nasdaq Composite plunged 5.5%, wiping out nearly $2.5 trillion in market capitalization. The regulatory concerns intensified following the Democrats’ midterm election victories, raising questions over future AI infrastructure investments and capital expenditure. The Nasdaq has entered correction territory, declining nearly 12% from its record closing high on October 6. Among AI-related stocks, Nvidia rebounded 4.5%, while AMD, Intel, Broadcom and Micron Technology advanced between 4.5% and 8%. However, global market sentiment remained fragile, with European markets declining over 1.5% and Asian equities witnessing significant losses, led by Japan’s Nikkei and South Korea’s Kospi, which fell around 6%, while Taiwan’s benchmark plunged over 8%. Despite the recovery in US technology stocks, fund manager James Athey highlighted concerns over elevated AI capital expenditure, indicating continued uncertainty over the sustainability of AI-driven market valuations and the broader equity market outlook.