Wall Street Rebounds After US$5.7 Trillion AI Rout, but Asia Slumps

NEW YORK, November 6, 2026 — Wall Street stocks mostly rallied on Friday after a heavy sell-off driven by fears that Democratic election victories this week would bring tighter US regulation of the artificial intelligence (AI) industry, according to Reuters and Bloomberg reports carried by The Edge Malaysia.

The S&P 500 rose 0.31 per cent and the Nasdaq Composite gained 1.1 per cent, while the Dow Jones Industrial Average fell 0.46 per cent. All three indexes still recorded weekly losses following a brutal sell-off in the previous session, Reuters reported.

Chipmakers led the rebound. The Philadelphia Semiconductor Index rose 4.2 per cent after its biggest one-day drop since April 2025, and Nvidia gained nearly 3 per cent after its worst day since January 2025. AMD, Intel and Micron Technology closed up between 5 per cent and 11 per cent.

The scale of the preceding rout was stark. Bloomberg reported that Thursday brought a US$2.3 trillion wipeout in the Nasdaq 100, with 57 per cent of its constituents ending at least 20 per cent below their highs. By Thursday’s close, the US stock market had lost US$5.7 trillion in value since its October 6 peak, according to an index tracking total equity market capitalisation.

Bloomberg said long-running worries over stretched valuations, mounting debt and doubts about the payoff from AI spending had been compounded by the Democratic sweep of Congress, which raised the prospect of restrictions on the data-centre buildout underpinning the boom. Texas’ Democratic governor-elect Gina Hinojosa said on Thursday that the state would introduce new laws to protect local communities from further mass build-up of data centres, Reuters reported.

“There are going to be losers, and not everybody who’s investing all of this money in capex is going to be a winner,” said Joe Gubler, a portfolio manager at Causeway Capital Management. Societe Generale’s head of quantitative research, Andrew Lapthorne, linked much of the turmoil to crowded positions in AI and oil, while Morgan Stanley data showed hedge funds had cut gross leverage from its June peak by the most in more than a decade.

Friday’s bounce contrasted with markets elsewhere. Europe’s STOXX 600 lost 1 per cent, while Japan’s Nikkei and South Korea’s Kospi both slumped about 6 per cent. For the Nikkei, it was the biggest one-day drop since the April 2025 “Liberation Day” tariff panic. The MSCI All-World index fell 0.68 per cent.

US non-farm payrolls rose by a stronger-than-expected 165,000, and annual wage growth came in at 3.1 per cent. Bloomberg said the strong jobs data reinforced bets on another Federal Reserve rate increase, with traders betting on a move in December. The 10-year Treasury yield ticked up to 4.86 per cent.

Brent crude settled at US$98.32 a barrel, up 0.03 per cent, on hopes the midterm results might prompt President Donald Trump to de-escalate the Iran war, while spot gold was flat at US$4,066.28 an ounce.

Source: Reuters and Bloomberg via The Edge Malaysia, November 7, 2026 (Malaysia time).

Source post: The Edge Malaysia on X | Source: https://theedgemalaysia.com/node/824942

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