Wall Street steadies after AI-driven sell-off and election turbulence, but analysts split on what comes next

Proposed by a contributor: US stocks have swung sharply in recent weeks, and investors are trying to work out whether the worst is over. The Nasdaq fell 5.3% in October after a sell-off on 30 October driven by worries that massive spending on AI infrastructure is outpacing near-term cash generation. After the decline, the S&P 500 was valued at about 19 times expected earnings, its lowest valuation since 2023. Markets have since stabilised, though not decisively. On 3 November the S&P 500 closed 0.36% higher at 7,568.92, the Nasdaq added 0.83%, and the Dow slipped 0.38%. By Friday 6 November, Wall Street was still sorting out what the US midterm elections will mean for the economy; the S&P 500 rose 0.3% and trimmed its weekly loss, while the Nasdaq gained 1.1% and the Dow dipped 0.5%. A strong US jobs report also kept Treasury yields firmer. Forecasts remain far apart. Bank forecasts for the S&P 500 range from 7,400 at Bank of America to 8,100 at Citi and UBS, while Morgan Stanley warns of possible short-term downside to 7,100-7,200. Readers care because US market swings affect pension funds, savings and company valuations around the world, and AI-linked stocks have become a major driver of market moves. I'd cover what triggered the sell-off, the competing forecasts, and what ordinary investors outside the US should watch. I'm based in Port Moresby and follow global market news daily, and I can explain what these swings mean for everyday investors and savers in PNG.