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Tech stocks rebound after midterm-linked AI selloff

Technology shares fell sharply last week as worries that political opposition could derail AI data-center expansion spread, then began to recover. Bitcoin held near $75,000 while smaller cryptocurrencies suffered steeper losses.

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Technology stocks fell hard last week after concerns emerged that political opposition could derail the build-out of data centers that power artificial intelligence. Hedge funds sold global tech shares at one of the fastest paces on record. The selloff followed the US midterm elections.

The sell-off in momentum stocks that came next was the largest in around 40 years. Momentum investing, which means buying shares that have been climbing, leaves those holdings badly exposed when prices turn sharply. Even so, few Wall Street analysts are prepared to say the AI boom has ended.

Nasdaq Composite25,189.46down −5.63%over 1 month
26,713.0324,315.0014 Oct13 Nov

Prices can be delayed by 15 minutes or more. Past moves say nothing about future ones.

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Bitcoindown −17.05%1 month

Stocks then recovered, with a renewed wave of dip buying pushing the market toward its best day since April. Lower oil prices helped as well. Citi downgraded tech stocks and favored a defensive rotation, meaning a shift toward steadier sectors, while upgrading Europe.

Lori Calvasina, Head of US Equity Strategy at RBC Capital Markets, spoke about a gloomy mood among investors and about low share prices compared with company profits, a situation termed compressed valuations. Bitcoin stayed close to $75,000, while altcoins, meaning cryptocurrencies other than bitcoin, fell more steeply. The technology sell-off also put SoftBank's large bet on AI at greater risk.

GuideFear and Greed Index today: how fearful or greedy US stock investors are

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