Stock Market Sell-Off: Nasdaq Plunges Nearly 3% as AI Fears Hammer Tech Stocks
Wall Street Stumbles Amid DeepSeek AI Disruption and Tariff Concerns
The Nasdaq Composite (^IXIC) suffered a steep decline of nearly 3% on Monday, leading a sharp sell-off in technology stocks as concerns over artificial intelligence (AI) competition rattled investors. The S&P 500 (^GSPC) dropped 1.7%, while the Dow Jones Industrial Average (^DJI) slipped 0.2%, marking a turbulent start to the week following a recent rally.
At the heart of the market turmoil is DeepSeek, a Chinese AI startup that claims its AI assistant operates with cheaper chips and less data while matching the performance of leading models. The company’s breakthrough has cast doubts on the long-term profitability and dominance of US AI giants, triggering a major sell-off in AI-focused stocks, including Nvidia (NVDA), Microsoft (MSFT), Alphabet (GOOG, GOOGL), Meta (META), and Amazon (AMZN).
AI Sell-Off: Nvidia, ASML, and Broadcom Take a Hit
AI chip leader Nvidia (NVDA) saw its shares tumble nearly 11%, suffering one of its worst single-day losses in months. Other semiconductor companies followed suit, with ASML (ASML) dropping 8%, while Broadcom (AVGO) and Micron Technology (MU) also took significant losses.
Investors are now questioning the sustainability of the AI-driven stock boom, especially as Big Tech earnings season kicks off this week. Earnings reports from Apple (AAPL), Tesla (TSLA), Meta (META), and Microsoft (MSFT) will be closely scrutinized, particularly for guidance on AI-related revenue growth amid rising competition from firms like DeepSeek.
Safe-Haven Assets Surge as Stocks Drop
As equities tumbled, investors flocked to safe-haven assets. The 10-year Treasury yield (^TNX) dropped 12 basis points to 4.50%, hitting its lowest level in over a month. Meanwhile, haven currencies such as the Japanese yen and Swiss franc saw a surge in demand.
Trade War Fears Resurface After Trump’s Tariff Threats
Adding to market jitters, former President Donald Trump reignited trade war concerns over the weekend in a diplomatic standoff with Colombia. Trump threatened to impose 25% tariffs on Colombian goods in retaliation for disputes over deported migrants. However, he later paused the tariffs after reaching a deal, easing some immediate economic concerns.
The incident, however, has raised fears that Trump—who is expected to play a significant role in economic policy debates—could aggressively use tariffs to push through policy objectives if re-elected. Investors are now bracing for potential disruptions to global trade that could further impact corporate profits.
Federal Reserve Meeting: Rate Policy in Focus Amid Trump’s Calls for Cuts
The Federal Reserve’s first policy meeting of 2025 kicks off this week, with officials closely monitoring potential economic shifts. Trump has publicly called for the Fed to cut interest rates, setting up a potential clash with central bank policymakers. The two-day meeting, beginning Tuesday, could provide critical insights into the Fed’s stance on inflation, interest rates, and economic stability amid rising market volatility.
What’s Next for Wall Street?
With AI competition heating up, earnings season in full swing, and trade war fears reemerging, investors are navigating a complex landscape. Analysts are closely watching whether Big Tech can maintain its AI-fueled momentum or if DeepSeek’s breakthrough signals a shift in market dynamics.
For now, volatility remains high, and investors will be watching the Fed’s decision, corporate earnings reports, and geopolitical developments for clues on the next market moves.
Source : Swifteradio.com
