Growing unease over the artificial intelligence trade is testing a monthslong habit of bottom-fishers to jump in every time the stock market dips.
The S&P 500 Index resumed declines on Tuesday, interrupting a two-day rebound following a 4.4% plunge on Thursday, its biggest since the height of a global trade war in 2025.
While futures pointed to a likely advance when markets open on Wednesday, the dip-buying impetus has been stronger after prior such pullbacks. In the 33 instances this century when the 500-member gauge dropped this much in a single day, an up session of at least 3.4% followed suit in the next week, barring few exceptions in 2009 and 2020, data compiled by Bloomberg show.
Dip buyers’ hesitation shows growing anxiety around the AI trade after Democrats swept the US midterm elections. A hotter-than-expected inflation report on Tuesday and a scandal around Nvidia Corp. added to the pressure.
“We are not using recent weakness in technology to increase exposure,” said Adam Phillips, managing director of portfolio strategy at EP Wealth Advisors. “We’ll be keeping an eye on Nvidia earnings next week, but the latest developments around the company come at a less than ideal time, to say the least.”