Chipmakers powered a Friday rebound that lifted the Nasdaq Composite more than 1%, a day after a rout knocked the index into correction territory. The bounce was not enough to stop all three major U.S. indexes from closing out a fourth straight losing week.
The Nasdaq gained 1.09% to settle at 24,579.42, recovering part of a slide that had left it more than 10% below its recent high.
The S&P 500 edged up 0.31% to 7,376.86. The Dow Jones Industrial Average went the other way, slipping 237.33 points, or 0.46%, to 51,285.73.
Over the full week, the S&P 500 dropped 2.7%, its steepest weekly decline since early April 2025. The Nasdaq fell 3.4%, and the Dow lost 0.9%.
Thursday did most of the damage. The S&P 500 sank 4.4% in its worst session since April 2025, the Dow gave up more than 1,800 points, or 3.4%, and the Nasdaq shed more than 1,400 points. The so-called Magnificent Seven lost roughly $1 trillion in combined market value that day.
Semiconductor shares bounced hardest. Advanced Micro Devices jumped 11% and Intel rose nearly 7%. Micron Technology added 5% after a 17% plunge, Nvidia climbed more than 3% after falling more than 9%, and Broadcom gained more than 2%.
The biggest builders of data centers moved more modestly in afternoon trading. Meta rose 2.1%, Amazon 0.9% and Alphabet 0.8%, while Microsoft dipped 0.6%. Beyond AI names, decliners outnumbered gainers in the S&P 500.
Election fallout hits data centers
IREN, which supplies data centers and computing power for AI training, soared 19.2% after quarterly results topped expectations and the company disclosed two contracts signed since the period ended.
Markets had rallied right after Tuesday's midterm elections, then turned sharply lower Thursday as investors weighed whether sweeping Democratic wins could mean tighter limits on data center construction and slower AI spending. Several newly elected Democrats have pressed for more oversight of the facilities, which draw heavily on electricity and water.
Democrats will hold both the House and Senate starting in January, but President Donald Trump keeps his veto, which Wall Street analysts said would likely block major federal curbs. They expect resistance to come at the state and local level instead. Voters have already approved more than 40 local ballot measures restricting data centers, according to Redbud Consulting, a political research firm.
Trump came to the industry's defense on Friday. He said he backs further growth of AI and pledged to cooperate with states to help it spread.
Profit questions and rate risk
Stuart Clark, a portfolio manager at Quilter, said a small cluster of technology and chip companies now dominates the market, magnifying how much their swings move the major indexes. Adam Crisafulli, head of Vital Knowledge, told clients the Friday rally looked tentative, with little aggressive buying.
It also highlights the concentration risk that has built up in U.S. equity markets.
Stuart Clark, Quilter portfolio manager
Investors still want proof that AI spending will translate into revenue. Anthropic, whose public offering paperwork showed fast growth but no profit so far, is slated to begin trading on the Nasdaq this month and is seen as a key test.
Vicky Redwood, chief economic adviser at Capital Economics, said the firm believes AI will raise productivity but doubts revenue can rise quickly enough to justify current investment levels. The firm predicts AI capital spending will slow next year, which Redwood said could weigh on U.S. growth.
A strong jobs report released before the rebound added another pressure point. Employers added 165,000 positions in October, more than economists expected, and unemployment fell to 4.1%. Wall Street economists said the hiring makes Federal Reserve rate hikes in December and in 2027 more likely, and Oxford Economics forecast increases in December and March.
