Market update
Relief Rally, But AI Chips Still Under Pressure
The market staged a powerful recovery today, with Nasdaq futures plunging nearly 2% overnight before reversing sharply. The $VIX cooled to 16.73, and major indexes finished with bullish gap-and-hold patterns. This could be an early sign of a capitulation bottom and a washout of weak hands, but we still need confirmation.
The Democratic election victory is creating uncertainty for AI infrastructure and semiconductors. Local opposition to data centers, particularly in states like Texas, is raising concerns about permitting, power availability, and future expansion.
However, the semiconductor selloff may be overdone. AI infrastructure is a nationwide investment cycle, and companies have multiple states to choose from as they expand. The political environment may change, but the demand for AI computing power is not disappearing.
The interesting part of today’s rotation: Hyperscalers rallied strongly, while semiconductor stocks remained under pressure.
$DRAM: -4.64%
$SMH: -2.73%
$NVDA: -1.43%
Meanwhile, Brent crude fell more than 8%, and the energy sector ETF $XLE dropped 5%. Lower oil prices helped ease inflation concerns and supported the broader market recovery.
The market is showing signs of stabilization, but the AI trade remains divided. Hyperscalers are attracting buyers, while semiconductor and data-center names are still facing selling pressure.
I am watching whether this rotation continues and whether high-beta stocks can hold today’s gains. A strong rebound is encouraging, but we need follow-through before calling a durable bottom.