Wall Street ends week sharply lower as AI valuation worries hit chipmakers

what happened

Seeking Alpha reports that U.S. equities closed the week lower after Democrats gained control of the House and Senate in the midterm elections. Doubts about high valuations of AI companies and heavy technology spending set off a sharp sell-off, with semiconductor shares hit hardest. The S&P 500 lost about 3%, the Nasdaq Composite 4%, and the Dow Jones 1.7%.

October jobs data beat expectations, and investors began pricing in a possible Fed rate increase in December. Tesla fell 11.3% after Musk said Cybertruck production would wind down in 2027, AMD dropped 17% and Nvidia 9.2%. Marvell agreed to buy Lumentum in an all-stock deal with an implied enterprise value of $115B, AppLovin jumped more than 31% after its quarterly report, and Oracle priced a $20B stock and bond offering.

why it matters

Two factors matter most for markets now: valuations of AI-linked companies and expectations for Fed rates. Strong hiring supports the case for tighter monetary policy, which typically weighs on expensive technology stocks. The chip sell-off shows how sensitive investors are to data center spending plans.

market impact

US stocks and chipmakers: pressure from rate hike expectations and doubts over AI spending

• ▼S&P 500 pressure down — expectations of a Fed rate hike after a strong jobs report
• ▼semiconductor stocks pressure down — doubts about the durability of AI and data center spending

instruments

on polymarket