Nick Goold
Artificial intelligence (AI) has been a major reason why stock markets have risen in 2026. Strong interest in AI has pushed US stocks to record highs and helped Japan’s Nikkei 225 rise sharply. However, stock markets fell heavily last week, raising concerns that AI stocks may have risen too far and could fall further.
For FX and CFD traders, this matters because falling technology stocks can also affect currencies, gold, bond yields and stock indices. Understanding these connections can help traders find opportunities and manage risk.
Why Did US Stocks Fall Last Week?
US stocks fell sharply last week, with the Dow Jones dropping 3.4% and the Nasdaq falling 5.5% on November 5. The Nasdaq also entered a correction, falling more than 10% from its recent high.
Stocks initially rose after the US midterm elections, when Democrats gained control of both chambers of Congress. However, the market quickly reversed as investors became concerned about the future of AI investment.
There were three main reasons for the fall.
- First, investors are questioning whether companies can make enough money from AI. Technology companies are spending billions on data centres, advanced chips and new services, but it remains unclear how quickly these investments will produce profits.
- Second, the election results raised concerns about stricter government rules on data centres, including electricity use, water supplies and environmental requirements. These could increase costs and slow AI investment.
- Third, technology stocks had already risen sharply, with investors expecting strong future growth. When confidence weakened, many investors rushed to take profits.
How Did the Stock Market Fall Affect Other Markets?
The selling in US technology stocks quickly affected other financial markets.
- US bond yields fell: Investors moved money from stocks into US government bonds, which are generally considered safer investments. When more investors buy bonds, bond prices rise and yields fall.
- Gold prices rose: Falling bond yields helped support gold because gold does not pay interest. Gold may also attract buyers when investors become worried about stock market losses.
- USDJPY declined: The US dollar weakened against the Japanese yen as investors reduced their holdings of US assets. Lower US bond yields also made the dollar less attractive. The yen often strengthens when investors become more cautious.
- The Nikkei 225 fell: Japanese stocks have benefited greatly from the AI boom in 2026, especially semiconductor and technology companies. When US technology stocks fell, Japanese shares also came under pressure. A stronger yen added to the selling because it can reduce profits for Japanese exporters.
- Other US stocks fell: The Dow Jones declined alongside the Nasdaq, showing that investors were reducing risk across the stock market rather than selling only AI companies.
These movements show how a change in confidence about AI can create trading opportunities across several markets at the same time.
Could the Anthropic IPO Bring Confidence Back?
Despite the recent fall in stock markets, investors are still showing interest in AI companies. OpenAI reportedly raised an initial $11 billion in funding at a valuation of around $1.25 trillion, showing that large investors are still willing to put money into AI.
The next big event could be Anthropic's stock market listing. The company is expected to begin selling shares to investors as early as the week of November 16, with marketing potentially starting on November 10. An initial public offering (IPO) is when a company sells shares to the public for the first time.
Anthropic was previously expected to be valued at up to $1.75 trillion, but after the recent market decline, some investors are now discussing a lower valuation of around $1.1 trillion to $1.3 trillion. The listing could still be delayed if market conditions worsen.
If the IPO attracts strong demand, it could help AI stocks recover. However, if investors are unwilling to pay such a high price or Anthropic shares fall after listing, AI stocks could face more selling. The Anthropic IPO could be an important test of whether investors are ready to buy AI stocks again.
What Happens if the AI Bubble Bursts?
If investors continue losing confidence in AI, the selling could spread to other markets.
The Nasdaq 100 would likely be hit hardest because many of its largest companies are linked to AI. However, the Dow Jones, S&P 500 and Japan's Nikkei 225 could also fall further.
Gold could rise as investors look for safer investments, especially if US bond yields fall. USDJPY could also fall if US bond yields continue to decline. However, the US dollar sometimes strengthens during a market crisis as investors move their money into dollars.
WTI crude oil could fall as concerns about slower economic growth reduce expectations for oil demand. Bitcoin could also come under pressure as investors sell riskier assets.
Markets do not always react as expected. For example, gold could initially rise but then fall if investors need to sell it to cover losses elsewhere. Rather than assuming how markets will react, traders should watch price movements and be ready to change their views.
What Should Traders Watch Next?
Several events could decide whether stock markets recover or fall further.
- Anthropic's IPO: Strong demand for shares could help AI stocks recover, while a disappointing IPO could lead to more selling.
- US politics: New rules on data centres and electricity use could increase costs and slow AI investment.
- Nvidia: As a leading maker of AI chips, Nvidia is important for the whole AI industry. Investors will watch chip demand, company earnings and recent news involving CEO Jensen Huang.
- US bond yields: Falling yields could support gold and push USDJPY lower, while rising yields could have the opposite effect.
- Nasdaq 100 and Nikkei 225: Further falls could show that investors remain worried, while a recovery above recent highs could signal improving confidence.
How Should FX and CFD Traders Approach the Market?
There has already been a lot of talk about an AI bubble, so stock prices may already reflect much of the bad news. Markets can recover even when the news is negative, especially if things are not as bad as investors feared.
AI also has strong long-term potential, so a fall in AI stocks does not mean the technology will fail.
Rather than trying to predict what happens next, traders should focus on price movements. If the Nasdaq 100 stays below its 10-day moving average, selling after short rallies could offer opportunities. If prices move back above the average and start making new highs, buying opportunities may return. The same approach can be used for gold, USDJPY and the Nikkei 225.
There is no need to use too many indicators. A simple 10-day moving average can work well for following trends and finding trading opportunities. Trust your analysis, follow your trading plan and use stop losses to manage risk. The key is to stay positive and flexible. Markets will always create new opportunities, whether prices rise or fall.
Find Trading Opportunities as AI Stocks Rise and Fall
The recent fall in US stocks shows how quickly markets can change. AI has helped stocks reach record highs, but worries about future profits and high share prices have caused investors to sell. However, the upcoming Anthropic IPO and news from major technology companies could help stocks recover and create new trading opportunities in gold, USDJPY and the Nikkei 225.
Whether AI stocks rise or fall, there are always trading opportunities. Focus on price movements, trust your analysis and manage your risk to make the most of changing markets.
