Global markets suffered a widespread downturn as U.S. stock futures showed mixed results after a severe sell-off in AI stocks, pushing the Nasdaq into correction territory. Asian markets, including Japan’s Nikkei 225 and South Korea’s Kospi, tumbled significantly, with the Nikkei entering a bear market. The AI sector bore the brunt of the losses amidst concerns over data center growth and post-election sentiment, though some experts see current dips as a buying opportunity.
Global stock markets faced significant turmoil on Friday, following a brutal sell-off in artificial intelligence (AI) stocks that pushed the Nasdaq into correction territory. Traders are also keenly awaiting a crucial payrolls report expected later today.
U.S. stock futures presented a mixed picture early Friday. Futures tied to the Dow Jones Industrial Average slumped 1.3%, while S&P 500 futures were down 0.35%. Nasdaq-100 futures, however, showed a slight recovery, inching 0.3% higher after heavy losses on Thursday. These moves come after Thursday's regular Wall Street session, which marked the worst one-day performance for the three major averages since April 2025. The Nasdaq Composite plunged 5.5%, closing over 10% below its recent peak and confirming a correction. The S&P 500 fell 4.4%, and the Dow dropped more than 1,800 points, or 3.4%.
The tech-led downturn swept across Asia, with South Korea's Kospi plummeting over 6% and Japan's Nikkei 225 dropping 5.9%, officially entering bear market territory. Taiwan's Taiex also entered a bear market, falling 4.51%. Other Asian markets, including Australia's S&P/ASX 200, Hong Kong's Hang Seng Index, and mainland China's CSI 300, also experienced significant declines.
The AI build-out sector suffered particularly acutely. Concerns intensified following Democrats' substantial wins in the House and Senate, along with key governorships like Texas, sparking fears of a potential slowdown in data center construction. Micron Technology and Advanced Micro Devices each plummeted 17%, while neocloud CoreWeave slid 10%. Even the 'Magnificent Seven' tech giants were not immune, collectively shedding over $1 trillion in market capitalization, with Nvidia dropping 9% and turning negative for 2026.
Despite the sharp pullback, Victoria Greene, CIO at G Squared Private Wealth, views this as a potential buying opportunity. She emphasized that the AI trade is not dead, calling it a "good discount," and expressed interest in memory stocks due to ongoing capacity crunch discussions. William de Gale, co-founder of Blue Box Asset Management, also noted that the AI sell-off represents an adjustment to more sustainable growth expectations, rather than a fundamental issue with demand, which he described as "insatiable."
In other news, Germany's Daimler Truck reported an impressive 89% year-on-year increase in earnings before interest and taxes (EBIT) for Q3, driven by a rebound in North American truck sales. On the geopolitical front, Bob McNally, CEO of Rapidan Energy Group, warned that U.S. military action against Iran could resume post-midterm elections, potentially sending Brent and West Texas Intermediate crude futures above $100 a barrel.
Investors are also bracing for the October payrolls report, expected Friday morning. The Dow Jones consensus estimates 59,000 jobs added last month, with the unemployment rate holding steady at 4.2%.
Texas Governor-Elect Gina Hinojosa, who made AI data center regulation a campaign focus, stated it's possible to work with Elon Musk's companies "on our terms," emphasizing the need for measures to protect Texans regarding data center operations. Former President Donald Trump, in a Truth Social post, attributed Thursday's stock market decline to the results of the election.
Video: Software stocks are a great place to hide, says portfolio manager (Originally available as an embedded video on CNBC, 6:16 duration)
