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Traders work on the floor of the New York Stock Exchange at the opening bell on Jan. 27, 2025 in New York City.
Angela Weiss | AFP | Getty Images
S&P 500 futures were little changed on Monday night. The action followed a sell-off fueled by worries over the emergence of Chinese startup DeepSeek and its greater implications for the artificial intelligence trade.
S&P 500 futures hovered near the flatline, while Nasdaq 100 futures were little changed. Futures tied to the Dow Jones Industrial Average slipped 49 points, or 0.1%.
Select tech shares attempted to claw back losses in after-hours trading after the day's steep sell-off in companies tied to artificial intelligence. Nvidia added 3% in after-hours trading after suffering a nearly 17% decline on Monday, which resulted in a market cap loss of nearly $600 billion — the biggest one-day drop for a U.S. company in history. Broadcom, Arm Holdings and Oracle also traded higher.
Concerns over DeepSeek came to a head on Monday, with the tech-heavy Nasdaq Composite losing more than 3%, while the S&P 500 slid about 1.5%. The Chinese startup last month unveiled a free open-source large language model that it says took less than $6 million to build. The development spurred worries around Big Tech's investment into AI. DeepSeek surpassed rival OpenAI on Monday to become the most-downloaded free app in the U.S. on Apple's App Store.
"Valuations remain extended, and while vulnerabilities were expected this year, developments like DeepSeek highlight the need for diversification beyond the Mag 7," said Seema Shah, chief global strategist at Principal Asset Management. "The 2025 theme of US exceptionalism is now facing uncertainty, with ongoing concerns around tariffs and inflation adding to market challenges."
Investors' attention is turning toward corporate earnings due this week. Starbucks and Boeing are due to report Tuesday. A slate of Magnificent Seven companies will report in the coming days, with Meta Platforms, Microsoft, Tesla and Apple due later this week.
The Federal Reserve will also hold its first policy meeting of the year on Wednesday to decide the level of interest rates. Fed funds futures are pricing in a 97% chance that interest rates will remain unchanged, according to CMEGroup's FedWatch Tool. Inflation data out Friday will give investors further insight on the health of the U.S. economy
Senate confirms Scott Bessent as U.S. Treasury secretary
The U.S. Senate voted on Monday to confirm Scott Bessent as Treasury secretary in President Donald Trump's administration.
The Senate voted 68-29 to confirm Bessent, an investor, hedge-fund manager and billionaire political donor who once worked with George Soros. He will be the 79th Treasury secretary.
Bessent is pushing a gradual 2.5% universal U.S. tariffs plan, the Financial Times reported on Monday evening. The levies could go up to as high as 20 percent, the report said.
— Pia Singh
Trump says China's DeepSeek 'should be a wake-up call' for U.S. industries
U.S. President Donald Trump said Monday evening that Chinese AI startup DeepSeek should serve as a "wake-up call" for American industries.
"The release of DeepSeek AI from a Chinese company should be a wake up call for our industries that we need to be laser focused on competing," Trump said. "Instead of spending billions and billions, you'll spend less, and you'll come up with, hopefully, the same solution under the Trump administration. We're going to unleash our tech companies, and we're going to dominate the future like never before."
The emergence of DeepSeek's competitive — and cheap — open-source AI model rattled markets on Monday and ignited fears that U.S. hyperscale tech spending could prove excessive in creating competitive AI models.
"I think maybe this is really more of a China-U.S. issue than people think," Larry Benedict of The Opportunistic Trader said after the previous session's sell-off. "That makes me a little bit more fearful."
— Pia Singh, Jesse Pound
English (US)