US technology stocks recovered on Tuesday, ending a brief selloff that had spooked investors over artificial intelligence spending, with the Nasdaq closing 0.83% higher and the S&P 500 up 0.37%.
The Dow Jones fell 0.38%, following a 1.9% drop in Apple's share price after the company released a worse-than-expected margin forecast due to the higher cost of memory chips. Nvidia rose 2.3% after dropping over four sessions, while fellow chipmakers Advanced Micro Devices, Broadcom and Micron Technology also jumped.
Tuesday marked the end of a selloff of AI and tech stocks that began last week, in which the Nasdaq posted its largest monthly decline in October since March 2025 and closed Monday in correction territory, 10% below its record close of 6 October.
The day's midterm elections did not appear to have a large impact on Wall Street, though investors predict Democrats will take at least a majority in the House and potentially gain Senate seats, which could lead to more AI regulation.
Small drops in oil prices, amid potential new negotiations with Iran and Russia, also eased investors. Brent crude dropped to $103 a barrel on Tuesday from $117 at the end of October.
While many Americans say frustration with the higher cost of living will be a major factor in their vote, Wall Street has continued to climb on investment in AI, particularly the chips and infrastructure used to power it. The S&P 500 is up 10% for the year so far, with the Nasdaq up 9% and the Dow up 7%.
Analysis from CNBC of post-midterm market performance from 1980 to 2024 showed the market tends to pick up after an election. Wall Street is often jittery while results are uncertain, but recovers once they are settled.
Analysis
Why This Matters
- The rebound signals that investor confidence in AI-driven earnings, the engine of this year's market gains, has not been broken by last week's selloff.
- Investors are already weighing the political risk: a Democratic House majority could bring tighter AI regulation.
- The Nasdaq entered correction territory on Monday, so whether the recovery holds will test how durable the AI investment boom really is.
Background
US midterm elections determine control of Congress and shape the legislative agenda for the rest of the presidential term. This year's vote landed at the end of a tense week for markets, with the Nasdaq recording its largest monthly decline in October since March 2025 and closing Monday 10% below its record close, a drop that put it in correction territory.
Key Perspectives
- Investors: predict Democrats will win at least a House majority and potentially gain Senate seats, which could lead to more AI regulation.
- CNBC analysis: post-midterm market performance from 1980 to 2024 shows the market tends to pick up after an election.
- Many American voters: say frustration with the higher cost of living will be a major factor in their vote.
What to Watch
- Whether the Nasdaq builds on Tuesday's rebound or deepens its slide below the correction threshold.
- The confirmed midterm results and any early signs of an AI regulation push if Democrats take the House.
- Apple's share price after its margin warning, and oil prices as potential negotiations with Iran and Russia develop.
Checked
12 claims in this story checked against 1 source: 12 supported.
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- SupportedUS technology stocks recovered as a selloff over AI spending eased.Business | The Guardian: “US tech stocks made a recovery on Tuesday afternoon after a selloff spooked investors over AI spending.”
- SupportedThe Nasdaq rose 0.83%.Business | The Guardian: “The S&P 500 was up 0.37% at market closing on Tuesday, while the tech-heavy Nasdaq increased 0.83% for the day.”
- SupportedChipmakers rebounded.Business | The Guardian: “Nvidia picked up a 2.3% gain after dropping over four sessions, while fellow chipmakers Advanced Micro Devices, Broadcom and Micron Technology also jumped on Tuesday.”
- SupportedApple’s margin forecast weighed on the Dow.Business | The Guardian: “The Dow dropped 0.38% following a 1.9% dip in Apple’s share price after the company released a worse-than-expected margin forecast due to the higher cost of memory chips.”
- SupportedThe S&P 500 rose 0.37%.Business | The Guardian: “The S&P 500 was up 0.37% at market closing on Tuesday, while the tech-heavy Nasdaq increased 0.83% for the day.”
- SupportedThe Dow fell 0.38% following a 1.9% drop in Apple’s share price after its worse-than-expected margin forecast, which the story says was due to higher memory-chip costs.Business | The Guardian: “The Dow dropped 0.38% following a 1.9% dip in Apple’s share price after the company released a worse-than-expected margin forecast due to the higher cost of memory chips.”
- SupportedThe brief selloff in AI and tech stocks began last week and ended on Tuesday.Business | The Guardian: “Tuesday marked the end of a brief selloff of AI and tech stocks that started last week”
- SupportedThe Nasdaq’s October decline was its largest monthly decline since March 2025.Business | The Guardian: “the Nasdaq in October experiencing its largest monthly decline since March 2025.”
- SupportedThe Nasdaq ended Monday in correction territory, 10% below its 6 October record close.Business | The Guardian: “The Nasdaq had ended on Monday in correction territory, dropping 10% from its 6 October record close .”
- SupportedThe midterm elections did not appear to have a large impact on Wall Street.Business | The Guardian: “Tuesday’s midterm elections didn’t appear to have a huge impact on Wall Street”
- SupportedBrent crude fell to $103 a barrel on Tuesday from $117 a barrel at the end of October.Business | The Guardian: “Brent crude, the global oil benchmark, dropped to $103 a barrel on Tuesday, down from $117 a barrel at the end of October.”
- SupportedThe story says Wall Street is often jittery while election results are uncertain and recovers once they are settled.Business | The Guardian: “Wall Street is often jittery before an election, when results are uncertain, but recovers once results are settled.”
