A sharp, artificial intelligence-led market correction that erased roughly $2.5 trillion from Wall Street value showed signs of easing on Friday. The recovery in the United States arrived as a welcome respite, though only after global markets in Asia and Europe faced heavy selling pressure.
US equities staged a rebound to end the week, with the Nasdaq climbing 1.8%, the S&P 500 rising 1%, and the Dow Jones Industrial Average posting a 0.1% gain. Several high-profile stocks battered on Thursday led the charge; Nvidia shares rose 4% and SpaceX climbed 6%. This follows a brutal Thursday session where Nvidia recorded its worst single-day performance since January 2025, with both companies experiencing share price drops of approximately 9%.
Despite the American turnaround, the damage in international markets was severe. South Korea’s Kospi index and Japan’s Nikkei 225 both suffered 6% declines, while the Taiex index in Taiwan dropped 4.5%. European indexes faced a similar downward trend. The Stoxx 600 index fell 1.7%, while the DAX in Germany and the CAC 40 in France declined 2.4% and 1.9%, respectively. ASML, the Dutch chip equipment giant, initially tumbled 6.6% on Thursday before recovering some ground to trade 3.9% higher on Friday. Those tied to the AI trade — were also recovering, with Nvidia trading 4% higher and SpaceX up by 6%, some of Thursday’s hardest-hit US stocks — namely. Markets often bounce back slightly after a sell-off as some investors step in to buy stocks at discounted prices. Particularly the Kospi, as investors have grappled with the sustainability of the AI boom, as well as the ultimate profitability of such steep investments, the recent volatility builds on a year of sharp swings for Asian markets.
The volatility highlights growing investor anxiety regarding the U.S. midterm election results and their potential impact on the AI sector. Democrats won control of both the House of Representatives and the Senate, alongside several state seats. Market participants now worry that a Democrat-led Congress could move to restrict the AI investment boom, which a Columbia Business School study suggests accounted for nearly all observed US GDP growth by late last year. These fears were compounded by backlash against the environmental and community impacts of data center construction. That sweeping victory has spurred concerns that Democratic representatives could now block or slow spending on new AI infrastructure. John Towfighi in New York and Gage Goulding in Seoul contributed to this report.
Economic analysts point to the Thursday slump, where the Nasdaq dropped 5.5%—its worst performance since President Donald Trump announced broad tariffs in April 2025—as a direct response to this political uncertainty. Theodore Shou, a partner at Yiyi Capital in Hong Kong, suggested that much of this movement is a natural market moderation following excessive hype earlier in the year. While tech stocks have become more tightly correlated with US counterparts, Shou noted that some investors remain hopeful that a new Congress might slow interest rate hikes, ultimately reducing borrowing costs. The moves reflected a retreat among investors from some of this year’s hottest trades.
Government officials have taken notice of the instability. In Japan, Prime Minister Sanae Takaichi stated she was aware of the sharp declines in the chip and AI sectors, confirming that the government is monitoring developments to ensure a strong economy. Similarly, South Korean finance minister Lee Hyoung-il convened a meeting to discuss the midterm election fallout. Ministry officials indicated that they are preparing measures to prevent overreactions, acknowledging that global market impacts cannot be ruled out. Jung In Yun of Fibonacci Asset Management Global noted that while the sell-off likely stemmed from re-evaluated expectations, demand for memory chips and computing power from companies like Samsung Electronics and SK Hynix remains robust. Which play an integral role in the global electronics supply chain, have been buoyed by insatiable demand for components such as semiconductor chips needed to build massive AI data centers, asian tech companies. According to as traders await the winners of the US midterm elections to take office early next year, analysts, Global markets will likely remain sensitive to changes in tech and monetary policy.
Andrew Sullivan, author of the Asian Market Sense newsletter, summarized the current sentiment as a move toward caution while the political landscape clarifies. “The thing that markets really don’t like is the uncertainty. And what they’re really saying is, we’re not sure what’s going to happen in January,” Sullivan said, explaining why many traders are choosing to move assets into cash until the situation stabilizes. So to speak.”, let’s put some money into cash that we can then use once the dust has settled.
