Stocks rebound after tech selloff that pushed Nasdaq into correction

Key points

• The S&P 500 rose 72 points and the Nasdaq gained 437 points in early Friday trading.
• Thursday's selloff pushed the Nasdaq down more than 1,400 points into a correction.
• Voters approved more than 40 ballot measures restricting data centers, per Redbud Consulting.

U.S. stocks stabilized in early trading on Friday after a steep selloff the previous day tied to worries about a possible slowdown in data center construction. The S&P 500 climbed 72 points, or nearly 1%, recovering from its worst day since April 2025 on Thursday. The Nasdaq Composite rose 437 points, or 1.8%, while the Dow Jones Industrial Average fell 129 points, or 0.2%.

Markets had risen sharply after this week's midterm elections but reversed on Thursday as investors weighed whether sweeping Democratic victories could bring tighter limits on data center construction and weaker artificial intelligence spending. According to an analysis by political research firm Redbud Consulting, voters had approved more than 40 ballot measures restricting data centers in communities nationwide as of Friday.

Tech shares lead the rebound

Tech stocks helped lift the Nasdaq after Thursday's drop of more than 1,400 points, which put the index in a correction, meaning a fall of at least 10% from its previous peak. Chipmaker Nvidia, seen as a bellwether for the AI sector, gained 6.6% in early trading, and Micron Technology rose 9.8%.

Among the companies leading the data center buildout, Alphabet climbed 2%, Amazon rose 1.1% and Meta gained 2.4%, while Microsoft shed 0.6%.

less confident that AI revenues will grow rapidly enough to sustain the current pace of investment

— Vicky Redwood, chief economic adviser at Capital Economics

Questions over AI spending

A central question for Wall Street is whether AI companies will deliver the revenue growth investors expect. Anthropic, which filed for an initial public offering last month and is expected to debut on the Nasdaq this month, is described as a critical test case; its filing showed rapid growth but no profit yet.

In a Friday research note, Vicky Redwood, chief economic adviser at Capital Economics, said the firm expects AI to boost productivity but is "less confident that AI revenues will grow rapidly enough to sustain the current pace of investment." The firm expects AI capital expenditures to slow next year, which Redwood said could weigh on U.S. economic growth.

Friday's rebound followed a jobs report showing employers added 165,000 jobs in October, above economists' expectations, with unemployment at 4.1%.