Low-profile Wall Street firm to double down on Anthropic despite tech rout

Wall Street stocks experienced a relief rally on Friday, following a heavy AI-related sell-off that resulted in trillions of dollars' worth of market value being wiped out. The fear of tighter US regulations for the AI industry due to Democratic election victories this week triggered the market movements. Benchmark indexes like the S&P 500, Nasdaq, and Dow Industrials were trading higher, with tech, communication services, and consumer discretionary stocks leading the gains.

The Dow Jones Industrial Average saw a slight decrease of 0.08%, while the S&P 500 rose by 0.71% and the Nasdaq Composite surged by 1.4%.

AMD, Intel, Micron Technology, Tesla, and SpaceX were among the companies that saw gains, with Nvidia recovering 3% after its worst day in over a year. Gerry Sparrow, president and portfolio manager at Sparrow Capital Management, stated that the disruption caused by the potential change in government from Republican-led to Democratic-led is not likely to be significant. The volatility around elections or any political event is always going to disrupt the market.

The AI trade was already under pressure due to concerns about the high cost of data centers and infrastructure, which could limit future returns and provoke margin calls. The bounce in Wall Street stocks was starkly different from the rest of the world, where Europe's STOXX 600 fell 1%, and Japan's Nikkei and South Korea's KOSPI both dropped about 6%. The MSCI All-World index decreased by 0.52%, while MSCI's Asia-Pacific shares outside Japan lost 3%.

Despite the main focus on the tech drama, nonfarm payrolls in the United States showed a stronger-than-expected 165,000 increase in jobs. The anticipated slowdown in annual wage growth to below 3% for the first time in nearly 5-1/2 years did not occur, as it came in at 3.1%. The yield on the benchmark US 10-year Treasury note rose to 4.85%, having dropped to its lowest level since September 9 overnight.

The dollar strengthened against major currencies like the euro, yen, and Swiss franc, while Brent crude prices rebounded towards $100 a barrel, but were still expected to see their biggest weekly decline since 2020. Gold prices fell 0.48% to $4,067.75.