US stocks stage timid recovery after $3.2 trillion plunge due to AI fears

Wall Street shares stabilized this Friday (6), one day after the Democrats' victory in the United States mid-term elections triggered a stampede in shares linked to artificial intelligence, eliminating US$3.2 trillion (R$17.6 trillion) from the value of American stock markets.

The Nasdaq 100, concentrated in technology, rose 1.4%, after plummeting 6.4% in the previous session — its worst day since the Covid-19 pandemic in 2020. The S&P 500, a reference index that brings together the main companies, ended the session up 0.3%, after falling 4.4% the day before.

Investors had dumped technology stocks over fears that Democrats would hamper the development of data centers, critical infrastructure underpinning the AI ​​boom.

These facilities have become an explosive political issue for voters across the country, and Democrats have vowed to slow their expansion.

On Friday, however, some of the hardest-hit technology stocks recovered, although some investors were still in a "state of shock from the performance pain" after the brutal losses, said Nomura's Charlie McElligott.

This Friday, the S&P 500 recovered less than 10% of the 334.89 points lost in the previous session. Since 1928, the index has recovered, on average, around 46% of the points lost after days of drops of at least 4%, which highlights the fragility of the reaction this time.

"Yesterday's move was strange — and quite scary," said Ajay Rajadhyaksha, global president of research at Barclays, who said the election result did not justify the magnitude of the sell-off.

He attributed the drop instead to forced selling by hedge funds that had bet on AI stocks and whose unwinding of positions worsened what would otherwise have been a moderate wave of selling.

Democrat Gina Hinojosa's victory for governor of Texas — a data center hub — was at the center of Thursday's retreat. Rajadhyaksha said markets had calmed down after Hinojosa reiterated that the planned moratorium on data center construction would only affect new licenses and would be temporary, meaning it should not hamper construction planned for 2027.

Nvidia, which fell more than 9% on Thursday and lost more than US$400 billion (R$2.2 trillion) in market value, advanced 2.8%. Chipmaker Micron rose 5.1% after falling more than 17% the previous day.

Some fund managers said the size of the declines made a recovery highly likely.

The outlook for corporate profits and the U.S. economy "had not changed enough to justify yesterday's sell-off," said Arun Sai, senior multi-asset strategist at Pictet Asset Management.

Following a sharp sell-off in momentum stocks such as chipmakers, Sai said he "wouldn't be surprised if dip buying emerges by the end of the year."

Still, some investors urged caution.

"Maybe the market is ultimately right to move forward without major concerns, but the speed with which it analyzed and explained what happened yesterday doesn't seem reasonable to me," said Mike Zigmont of Visdom Investment Group. "There should be more caution."

Asian and European shares fell this Friday, as the previous day's debacle reverberated across global markets. Japan's Nikkei 225 plunged 6%, the worst single-day drop since Donald Trump launched his trade war in April 2025.

The Kospi, a South Korean index heavily weighted by technology companies, one of the biggest beneficiaries of the AI boom and dominated by chipmakers, fell 6%.

The falls in Europe, which does not have the technology giants that dominate the US and Asian markets, were smaller this Friday: the Stoxx Europe 600 ended the day down 1.1%.