Tech stocks rebound as AI selloff ends; Apple slides on margin warning

The Nasdaq rose 0.83% on Tuesday, closing out a brief AI-driven selloff that had pushed the tech-heavy index into correction territory just a day earlier. The S&P 500 added 0.37% at the closing bell, while the Dow slipped 0.38%.

Apple dragged the Dow lower. Its shares fell 1.9% after the company issued a worse-than-expected margin forecast, citing the higher cost of memory chips. That single stock move explains most of the Dow's decline on the day.

The chipmakers did the heavy lifting on the way back up. Nvidia gained 2.3% after dropping over four straight sessions, and Advanced Micro Devices, Broadcom and Micron Technology all jumped alongside it.

What does this change for AI investors?

Tuesday marked the end of a selloff that started last week and spooked investors over the pace of AI spending. The damage was real while it lasted: the Nasdaq posted its largest monthly decline since March 2025 in October, and it ended Monday in correction territory, down 10% from its 6 October record close.

The rebound suggests the pullback was a repricing, not a rout. Wall Street has continued to soar off investments in AI, particularly the chips and infrastructure used to power the technology, and that underlying bid reasserted itself quickly.

The year-to-date scoreboard frames the dip in perspective:

• S&P 500: up 10% for the year
• Nasdaq: up 9%
• Dow: up 7%

Oil helped, too. Brent crude, the global benchmark, dropped to $103 a barrel on Tuesday, down from $117 at the end of October, as investors weighed potential new negotiations with Iran and Russia. Cheaper energy eased the broader pressure on equities.

Did the midterms move the market?

Not much. Tuesday's midterm elections didn't appear to have a huge impact on Wall Street, though investors are predicting Democrats get at least a majority in the House and potentially gain seats in the Senate. That outcome could lead to more AI regulation, which is the variable practitioners should watch from here.

The election backdrop matters more for sentiment than for Tuesday's tape. Many Americans said frustration with the higher cost of living would be a major factor in their vote. But Wall Street's gains this year have run on AI infrastructure spending, not on consumer-price politics.

History is on the market's side here. Analysis from CNBC of post-midterm market performance from 1980 to 2024 showed the market tends to pick up after an election. Wall Street is often jittery before an election, when results are uncertain, but tends to recover once results are settled.

For portfolio managers, the takeaway is straightforward: the AI trade survived its first real stress test since the October peak, chip demand remains the sector's engine, and the next swing factor is likely regulatory, not demand-side, if the midterm outcome holds as investors expect.