U.S. stock futures edged higher in early Tuesday trading, attempting to recover from Monday’s sharp sell-off.
Only 8 stocks in the Dow fell today. Not bad given how worried everyone was 10 hours ago.
— Ryan Detrick, CMT (@RyanDetrick) January 27, 2025
The market rout was triggered by concerns over Chinese startup DeepSeek and its potential impact on the artificial intelligence sector. Futures tied to the S&P 500 rose 0.4%, while Nasdaq 100 futures added 0.7%.
Dow Jones Industrial Average futures climbed 19 points in premarket trading. Select tech shares sought to regain ground after Monday’s steep declines.
Tech led to downside today while Consumer Staples was in first place, followed by Health Care; Health Care now in first place YTD while Tech is in last … Russell 1000 Value rose most today and is in lead YTD (while NASDAQ is in last place) pic.twitter.com/2V9tFYR0a6
— Liz Ann Sonders (@LizAnnSonders) January 27, 2025
Nvidia added more than 5% following a nearly 17% drop on Monday, which erased around $600 billion in market value, marking the largest single-day loss for a U.S. company in history.
Other tech giants also traded higher, with some shares gaining 4% and 2.9%, respectively.
What caused selloff in AI-dominated stocks and what does it mean for markets? Nikunj Dalmia DECODES | Editor's Take @nikunjdalmia https://t.co/PiJHlBrFpn
— ET NOW (@ETNOWlive) January 28, 2025
The market turbulence on Monday centered around DeepSeek, a Chinese startup that introduced a free, open-source large language model developed for less than $6 million. This development raised fears about Big Tech’s substantial investments in AI.
Nvidia share price: DeepSeek makes a deep $600 bn cut in AI chip-maker's market cap, pushes it behind Apple, Microsofthttps://t.co/AeoMzm8bos
— ET NOW (@ETNOWlive) January 28, 2025
Valuations remain extended, and while vulnerabilities were expected this year, developments like DeepSeek highlight the need for diversification beyond the Mag Seven,” said Seema Shah, chief global strategist at Principal Asset Management.
Tech shares reclaim ground
Investor attention is now turning to corporate earnings due this week.
Companies in the Magnificent Seven are set to report earnings, offering further insights into market directions. The Federal Reserve will also begin its two-day policy meeting on Tuesday, expecting interest rates to remain unchanged. Inflation data expected on Friday will provide additional clues about the health of the U.S. economy.
Nvidia shares rose more than 2% in after-hours trading, attempting a slight comeback. Despite the recent plunge, Nvidia’s stock is up about 94% over the past year. On Monday, the U.S. Senate confirmed Scott Bessent as Treasury Secretary with a 68-29 vote.
Bessent plans to implement a gradual 2.5% universal U.S. tariffs plan, which could go as high as 20%. U.S. President Donald Trump remarked that DeepSeek’s AI release should be a “wake-up call” for American industries, emphasizing the need for the U.S. to be more competitive. Nasdaq 100 futures showed gains after 6 p.m. ET on Monday, adding 0.1%, while S&P 500 futures gained about 0.3%.
Dow Jones futures dipped slightly but remained largely stable.
