Fears of an artificial intelligence slowdown under a Democrat-controlled Congress sent AI and semiconductor stocks tumbling, but history suggests last week’s selloff was a buying opportunity.
History Points to a Rebound
The S&P 500 fell 4.4% on Thursday, its largest daily drop since April 2025, as about $3 trillion in market value was wiped out in a single session, before a partial rebound on Friday.
Before that, the index had recorded 56 one-day declines of at least 4% since 1952, market commentator The Kobeissi Letter said in a post on X.
“History says last week’s drop was a buying opportunity,” the analyst noted, adding that drops like Thursday’s have tended to be followed by gains.
On average, the S&P 500 has risen 1% over the next week, versus 0.2% in a typical week, and 6.7% over the next three months, versus 2.2% in a typical stretch, the analyst said.
“History suggests the market is set for a meaningful rebound.”
Chip Stocks Took the Brunt of the Selling
The selloff hit chip stocks hardest as investors worried that Democratic midterm election wins could bring new limits on data centers, the buildings that drive demand for AI chips.
On Thursday, the iShares PHLX SOX Semiconductor Sector Index Fund (NASDAQ:SOXX) plunged more than 12%, with Nvidia Corp. (NASDAQ:NVDA) tumbling more than 9%.
Micron Technology Inc. (NASDAQ:MU), Advanced Micro Devices Inc. (NASDAQ:AMD) and Marvell Technology Inc. (NASDAQ:MRVL) each fell more than 15%, and neocloud provider CoreWeave Inc. (NASDAQ:CRWV) dropped about 10%.
The stocks rebounded Friday as the semiconductor index rose 3.51%, while AMD jumped 11.04%, Marvell rose 5.73%, Micron gained 5.12%, and Nvidia added 2.78%.
CoreWeave, which has fallen about 50% over the past month, closed 6.28% higher.
How Has the S&P 500 performed?
The S&P 500 closed 0.31% higher at 7,376.86 on Friday but is down 5.65% over the past month. It is up 7.76% year-to-date and 9.77% over the past year.
Price Action: The State Street SPDR S&P 500 ETF Trust (NYSE:SPY) gained 0.31% on Friday to close at $735.29, while it was up 0.72% in overnight trading on Sunday.