Markets Catch Their Breath After Friday’s AI Selloff — But Traders Are Not Buying the Dip Yet

Global markets steadied on Monday, November 2, after one of the ugliest sessions of the year for technology stocks. US equity futures turned higher in Asian trading, with contracts on the Nasdaq 100 up 0.7% and the S&P 500 up about 0.4%, after Friday’s rout saw the Nasdaq 100 slump 3.5% — its worst day since June — and the Philadelphia Semiconductor Index plunge 7.2%. Intel suffered its steepest one-day fall in more than four decades, and Apple reclaimed the title of the world’s most valuable company from Nvidia as investors rotated toward perceived safety.

The trigger was not a single earnings miss but a growing doubt. Results from Alphabet and Amazon fuelled concern that the technology giants’ enormous AI spending — a combined $750 billion planned this year, according to Bloomberg — is eroding the core businesses paying for it. The Cboe Volatility Index touched its highest intraday level since April, and demand for put options protecting against further losses surged. Monday’s bounce, then, looks less like confidence returning and more like exhaustion after a violent session. As ING chief investment strategist Simon Wiersma put it, the rebound is “relatively modest compared with Friday’s selloff,” and should not yet be read as a convincing buy-the-dip signal.

Two other forces helped the mood. Brent crude fell more than 3% to below $110 a barrel after reports that President Donald Trump wants to give diplomacy with Iran more time before deciding on further strikes after Tuesday’s midterm elections, easing one of the market’s biggest inflation worries. Gold climbed back toward $3,890 an ounce after its lowest close in more than a year on Friday, and Bitcoin rose for a third straight day to around $78,000 as the crypto market continued to recover from last week’s record Binance hack. In Asia, the picture was mixed: Japan’s Nikkei fell 0.46% after memory maker Kioxia gave a cautious outlook, South Korea’s Kospi dropped 0.89%, but Chinese stocks rallied as regulators prepared to meet banks and securities firms to discuss support for the capital market.

India was the clearest bright spot. The Sensex surged more than 950 points and the Nifty 50 crossed 23,300, both up over 1.3%, helped by falling oil, strong heavyweight earnings and foreign investors turning net buyers. Reliance Industries jumped as much as 6% after reporting a 41% year-on-year rise in September-quarter profit to ₹25,548 crore, while markets regulator Sebi reportedly recommended removing the long-term capital gains tax for foreign investors — a move aimed at reviving India’s underperforming equities. The rupee firmed to around 94.82 per dollar as crude cooled.

Why this matters is the question the whole market is asking: is this a correction inside a continuing AI boom, or the start of something bigger? Barclays strategists argue it is a “garden variety correction,” the third of its kind in 2026, and note that earnings power blew past market concerns in both previous cases. Morgan Stanley’s Mike Wilson is more cautious in the near term, flagging “clearing events” — the midterms, AI stress and liquidity constraints — that could pull the S&P 500 about 9% from its record to around 7,100, while still expecting it to push toward 8,000 once those pass. The honest reading is that both can be true: a market can correct sharply and still be in a long-term uptrend, and the difference only becomes clear in hindsight.

What to watch next: Tuesday’s US midterm elections, which could reshape the Iran question and the rate outlook; a slate of employment data this week; and Nvidia’s earnings later in November, the single report most likely to settle the AI-spending debate. The 10-year Treasury yield, near 4.92% and well below October’s 5.36% peak, is another gauge worth watching — a renewed spike would tighten financial conditions fast. For readers learning how macro news moves markets, our forex section explains how yields and oil drive currencies, and the forex tools page has calculators for sizing positions in volatile weeks. (Not financial advice.)