Tech shares rebound after investor concerns about AI costs

The outcome of Tuesday’s midterm elections appeared to have minimal effect on Wall Street, although expectations suggest Democrats will secure a majority in the House of Representatives and potentially gain seats in the Senate, which could trigger increased AI regulation.

The S&P 500 rose 0.37% at the close of trading on Tuesday, while the Nasdaq composite index increased by 0.83% for the day. The Dow Jones Industrial Average, however, decreased 0.38%, influenced by a 1.9% decline in Apple’s share price after the company projected lower-than-anticipated profit margins due to elevated memory chip costs.

Nvidia shares increased by 2.3% after a series of losses spanning four days. Other semiconductor companies, including Advanced Micro Devices, Broadcom, and Micron Technology, also experienced gains on Tuesday.

Tuesday concluded a brief period of selling pressure on AI and technology stocks, a downturn that saw the Nasdaq experience its largest monthly decline since March 2025. The Nasdaq had entered correction territory on Monday, falling 10% from its record close on October 6.

Easing oil prices, potentially linked to upcoming negotiations with Iran and Russia, also contributed to investor relief. Brent crude, a global benchmark, fell to $103 per barrel on Tuesday, a decrease from $117 per barrel at the end of October.

Despite widespread American concerns about the rising cost of living, Wall Street has benefited from investments in AI, particularly the chips and infrastructure that support it. The S&P 500 has risen 10% year-to-date, while the Nasdaq and the Dow are up 9% and 7%, respectively.

Historical analysis by CNBC of market performance following elections from 1980 to 2024 indicates a tendency for markets to recover after an election, often rebounding from pre-election volatility caused by uncertainty.