Global markets stabilized following a sharp selloff triggered by concerns over the cost and competition in the AI space. Investors await the upcoming megacap earnings season and the Federal Reserve's rate decision.
Stocks struggled to gain traction after a selloff that shook markets around the globe, with traders gearing up for the start of the megacap earnings season and U.S. Federal Reserve decision on rates. Nvidia Corp. wiped out gains registered at the open. Treasury yields barely budged and the U.S. dollar advanced.
\ A punishing selloff in technology stocks on Monday as the Invesco QQQ Trust Series 1 (ticker QQQ) sank nearly 3% on Monday, spooked by Chinese startup DeepSeek’s AI progress, investors poured $4.3 billion into the tech-heavy fund — its biggest one-day haul since 2021. The same impulse drove a record $1 billion into the GraniteShares 2x Long NVDA Daily ETF (NVDL), and almost $1.3 billion into the Direxion Daily Semiconductors Bull 3x Shares (SOXL), Bloomberg data show, despite double-digit plunges in both funds. News that DeepSeek’s latest AI model was reportedly developed at a much cheaper cost than that of American firms such as OpenAI sent shockwaves through the tech and chip landscape. However, the ETF flows illustrate that the buy-the-dip mentality is still alive and well, even as investors question whether US tech giants are massively overspending on the AI build-out. \ In early trading in Toronto, the S&P/TSX Composite Index was up 7.36 points to 25,294.13. In New York, the Dow Jones Industrial Average was down 51.33 points to 44,651.49, the S&P 500 Index was down 17.21 points to 5,995.07, and the Nasdaq Composite Index was down 36.64 points to 19,305.66. The world’s largest tech companies rose after a selloff that shook markets around the globe, with stocks stabilizing as traders geared up for the start of the megacap earnings season and U.S. Federal Reserve verdict on rates. Equities tried to regain traction, following a slide that drove Wall Street’s so-called fear gauge to its biggest surge since the Fed rattled trading in December with a more hawkish tone. Nvidia Corp. climbed 1.6%, rebounding from its largest value loss in history and pacing gains in battered chipmakers. That bounce in the tech space also spilled over to the bond market, with Treasury yields slightly higher across the U.S. curve. The tech reporting period that kicks off Wednesday may prove sobering for equities bulls: While earnings from the so-called Magnificent Seven behemoths are still rising — and far outpacing the rest of the market — Wall Street anticipates a marked slowdown in growth relative to prior quarters. What it comes down to is that pressure is mounting on the cohort, which has driven a torrid rally in the Nasdaq 100 Index since the end of 2022. \ Nvidia and other U.S. tech stocks are steadying a day after tumbling on doubts about whether the artificial-intelligence frenzy really needs all the dollars being poured into it. The S&P 500 was 0.2% higher in early trading Tuesday. The Dow Jones Industrial Average was little changed, and the Nasdaq composite rose 0.4%, a day after sliding 3.1%. The spotlight remains on Nvidia, whose chips are powering much of the move into AI and whose stock has become a symbol of the surrounding frenzy. Nvidia rose 2.3%, recovering some of its nearly 17% plunge the day before, its worst since the 2020 COVID crash. Nvidia Corp. is up three per cent in premarket trading after falling 17 per cent yesterday, Bloomberg News reported this morning. Monday’s selloff, which sent many of the largest U.S. technology companies plunging, came after Chinese-based DeepSeek launched its latest AI model, which reportedly matches or surpasses the performance of OpenAI's models at a significantly lower cost. The development raised concerns about the intensifying competition in the AI space and the potential for a shake-up in the tech industry
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