This is solved now

by going into this direcotry, mentioned in the log:
root: /Users/YOUR_USER_NAME/.local/share/sfdx/node_modules/@salesforce/lwc-dev-server
I then deleted the node_modules folder and run a
npm install --save-dev

[refered this][1]


  [1]: https://github.com/forcedotcom/lwc-dev-server-feedback/issues/98