Analysts and investors react to AI market rout
SPY•Wall Street recovered some ground Friday after fears of tighter U.S. AI regulation helped wipe trillions of dollars off global stock markets the previous day. The Nasdaq rose 1.5%, partially recovering from a 5.5% Thursday drop, while South Korea’s KOSPI fell 6% and Taiwan’s benchmark slid 4.5% Friday.
1. Markets rebound unevenly
Wall Street recovered some ground Friday after the previous day’s sell-off, which followed fears about tighter U.S. regulation of AI. The Nasdaq rose 1.5%, clawing back part of its 5.5% drop on Thursday, its biggest fall since the tariff-triggered “Liberation Day” rout in 2025. In Asia, South Korea’s KOSPI fell 6% and Taiwan’s benchmark dropped 4.5%, their largest weekly declines in more than two decades.
2. Investors weigh risks
Market participants cited crowded positioning, leveraged investors and options-related hedging as factors that amplified the sell-off. Some said parts of technology looked cheap and the market might be oversold, while others warned that questions about AI spending, financing and regulation remained unresolved. Several said it was too early to know whether markets had bottomed.
