Berkshire shares surge as Wall Street swoons amid AI fears

On Friday, Wall Street stocks experienced a significant rally, reversing a recent heavy selloff driven by concerns over tighter US regulations for the AI industry following Democratic election victories. The S&P 500 and Nasdaq both finished higher, with technology, communication services, and industrials stocks leading the gains.

The Dow Jones Industrial Average, however, ended lower, marking a weekly loss after a brutal sell-off the previous day. The Dow Jones Industrial Average fell 0.46%, the S&P 500 rose 0.31%, and the Nasdaq Composite gained 1.1%. The Philadelphia Semiconductor Index rebounded 4.2% after plummeting its biggest one-day drop since April 2025.

Nvidia saw a nearly 3% increase following its worst day since January 2025, when a Chinese low-cost AI model, DeepSeek, triggered market panic. Other heavyweights like AMD, Intel, and Micron Technology also saw gains of between 5% and 11%, while Tesla and SpaceX were up 4% and nearly 9%, respectively. Gerry Sparrow, president and portfolio manager at Sparrow Capital Management, attributed the disruption to the uncertainty of changing government from Republican-led to Democratic-led control at federal, state, and local levels.

He added that most of the AI buildout disruptions might not materialize, but the political change is causing investor jitters. Electoral, war, or terrorist attack uncertainties always disrupt market expectations. Texas Democratic Governor-elect Gina Hinojosa announced new laws to protect local communities from further data center mass buildup, while the AI trade faced pressure due to the high costs of data centers and infrastructure.

Global markets reacted differently, with Europe's STOXX 600 down 1%, Japan's Nikkei and South Korea's KOSPI both slumping around 6%, and the MSCI All-World index falling 0.68%. The MSCI's Asia-Pacific index outside Japan lost nearly 3%. US nonfarm payrolls showed a stronger-than-expected 165,000 job increase, but annual wage growth did not slow down, coming in at 3.1%.

The benchmark 10-year Treasury note's yield rose to 4.86%, while the dollar strengthened against major currencies but fell against the euro. Brent crude prices settled at $98.32, rising slightly, and gold remained flat at $4,066.28 per ounce.