S&P and Nasdaq Futures Recover After Tech Selloff

 

S&P and Nasdaq Futures Recover After Tech Selloff

Futures linked to the S&P 500 and Nasdaq showed gains on Tuesday, rebounding from significant losses the previous day. The earlier decline was driven by concerns over a low-cost artificial intelligence (AI) model introduced by Chinese startup DeepSeek, which reportedly matches or exceeds the performance of leading U.S. AI models at a much lower cost.

Analysts noted that the market reaction reflected worries about the massive investments in AI by U.S. tech giants becoming less competitive if cheaper alternatives emerge. Nvidia, a leader in AI chips, saw its market value drop by $593 billion on Monday but recovered slightly in premarket trading, rising 4.8%. Other AI-related stocks, such as Oracle and Broadcom, also gained 3.5% and 4%, respectively. 

Power companies, which are expected to benefit from increased energy demand due to AI data centers, also rebounded after Monday's losses. Vistra and GE Vernova rose 4.6% and 3%, respectively. 

On Monday, the Nasdaq fell over 3%, marking its worst single-day performance in more than a month, while the S&P 500 dropped nearly 1.5%. By early Tuesday, Dow E-minis were up 25 points (0.06%), S&P 500 E-minis rose 19.5 points (0.32%), and Nasdaq 100 E-minis gained 125.75 points (0.59%).

This week, corporate earnings are expected to dominate market attention. Companies like Boeing, General Motors, and Lockheed Martin are set to report quarterly results, with tech giants Microsoft, Meta, Apple, and Tesla also scheduled for later in the week. 

Investors are also awaiting the Federal Reserve's interest rate decision on Wednesday, with expectations that rates will remain unchanged. Key economic data, including the December Personal Consumption Expenditures (PCE) report and January consumer confidence figures, will be released later in the week.

In other news, former U.S. President Donald Trump announced plans to impose tariffs on imported computer chips, pharmaceuticals, and steel. Reports suggest that newly appointed Treasury Secretary Scott Bessent is advocating for a gradual increase in universal tariffs on U.S. imports, starting at 2.5% and rising monthly. These proposed tariffs have raised concerns about potential inflationary pressures and their impact on Federal Reserve policy.