U.S. stocks mostly rallied on Friday as chipmakers clawed back ground after a brutal AI-driven selloff tied to Democratic midterm gains and fears of tighter regulation.

According to Reuters, the S&P 500 rose 0.31% and the Nasdaq Composite gained 1.1%, while the Dow Jones Industrial Average slipped 0.46%. All three indexes still finished the week lower after Thursday's plunge. The Philadelphia Semiconductor Index jumped 4.2% after its biggest one-day drop since April 2025. Nvidia climbed nearly 3%, and AMD, Intel and Micron closed up between 5% and 11%. Tesla rose about 4% and SpaceX nearly 9%.

Investors have fretted that a Democrat-led Congress could curb AI data-center buildouts just as the trade already faces questions about returns on massive infrastructure spending. Texas Democratic Governor-elect Gina Hinojosa said Thursday the state will introduce new laws to protect communities from further mass data-center buildup. Portfolio manager Gerry Sparrow told Reuters the disruption may prove limited, but political uncertainty is still shaking expectations.

Elsewhere, Europe's STOXX 600 fell 1%, while Japan's Nikkei and South Korea's KOSPI each slumped about 6%. Separately, U.S. nonfarm payrolls rose a stronger-than-expected 165,000, and annual wage growth came in at 3.1%. The 10-year Treasury yield ticked up to 4.86%.

Why it matters

Friday's chip bounce shows bargain hunting after a political scare — but weekly losses and overseas selling underline how fragile the AI trade has become.