Nasdaq down ~2.5%, S&P 500 falls ~1.5%, Dow edges red
Tech weakest S&P 500 sector; Staples lead gainers
Euro STOXX 600 index off ~0.1%
Dollar down; gold, crude both off >1%; bitcoin down ~3%
U.S. 10-Year Treasury hits 1-month low of 4.498%, now ~4.56%
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DEEPSEEK SINKS STOCKS IN EARLY TRADE
U.S. stocks dropped in the early stages of trading on Monday as the surging popularity of a low-cost Chinese DeepSeek artificial intelligence model ignited a selloff in AI-related shares.
Megacap stocks, including Nvidia NVDA.O, which have been a major driver of the stock market rally over the past two years, while helping to fuel concerns about market concentration, are being hit particularly hard, with the chipmaker down about 11% and staring at potentially its biggest one-day percentage drop since March 2020.
The Philadelphia semiconductor index .SOX is plummeting more than 6% and is on pace for its biggest daily percentage drop since Sept. 3.
Still, the damage is not isolated to tech and chip-related sectors, with data center real estate names such as Digital Realty DLR.N, Equinix EQIX.O and Iron Mountain IRM.N suffering sharp declines.
"If it’s true that DeepSeek is the proverbial 'better mousetrap,' that could disrupt the entire AI narrative that has helped drive the markets over the last two years. It could mean less demand for chips, less need for a massive buildout of power production to fuel the models, and less need for largescale datacenters," said Brian Jacobsen, chief economist at Annex Wealth Management in Menomonee Falls, Wisconsin.
"However, it could also mean that AI becomes more accessible and help kickstart the development of a wide array of useful applications."
Both the S&P 500 .SPX and Nasdaq Composite .IXIC are on track for their worst daily performance since Dec. 18. The Nasdaq is below its 50-day moving average for the first time since Jan. 16.
Among the S&P 500 sectors, tech .SPLRCT is seeing the brunt of the pressure, down nearly 5%, while the defensive consumer staples .SPLRCS group is the best performer, rising more than 1%.
On the data front, new home sales increased more than expected in December, in the most recent sign the housing market had gained some momentum toward the end of 2024.
Below is your market snapshot:
(Chuck Mikolajczak)
*****
FOR MONDAY'S EARLIER LIVE MARKETS POSTS:
DEEPSEEK THREAT DEEP-SIXING U.S. STOCK FUTURES - CLICK HERE
TOO MUCH UNCERTAINTY TO BE POSITIVE ON TREASURIES - CLICK HERE
WHAT COULD TAKE MARKETS DOWN? - CLICK HERE
DEEPSEEK CONCERNS SET STOXX TECH FOR WORST DAY SINCE OCT - CLICK HERE
BEFORE THE BELL: IT'S RISK OFF IN EUROPE - CLICK HERE
CHINA'S AI CHALLENGER PUTS INVESTORS ON EDGE - CLICK HERE
Early trade Jan 27 https://tmsnrt.rs/3Emyjy5
(Reporting by Chuck Mikolajczak)
((charles.mikolajczak@tr.com; @ChuckMik;))
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