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 inched higher early Tuesday, following a sell-off fueled by worries over the emergence of Chinese startup DeepSeek and its greater implications for the artificial intelligence trade.
Futures tied to the S&P 500, along with Nasdaq 100 futures, rose 0.1%. Meanwhile, futures tied to the Dow Jones Industrial Average hovered around the flatline.
Futures were trading in step with Nvidia in the premarket, with both trading off their highs during the session. Nvidia added more than 2% 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 and Oracle also traded higher by more than 3% and around 1%, respectively.
Concerns over DeepSeek came to a head on Monday, with the 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 Seven,” 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 is due to report Tuesday after the bell. 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 kick off its two-day policy meeting on Tuesday. Fed funds futures are pricing in a more than 99% 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
