Market Volatility: Tech Stocks Rebound Amid AI Concerns and Tariff Threats
After a tumultuous Monday, tech stocks are staging a comeback, with Nasdaq and S&P 500 futures inching up on Tuesday. The rebound comes as investors reassess the potential risks and rewards of Big Tech’s investments in artificial intelligence (AI). Meanwhile, President Donald Trump’s renewed tariff threats have revived concerns about a trade war, casting a shadow over the market.
AI Anxiety: DeepSeek’s Cheaper Model Raises Questions
The buzz surrounding Chinese startup DeepSeek’s potentially cheaper AI model has sparked concerns about US leadership in the field. This has led to questions about whether chipmakers and other tech names can deliver on high earnings expectations. Bellwether chip giant Nvidia, which plummeted 17% on Monday, is leading the charge, rising almost 3% in pre-market trading.
Tariff Tensions: Dollar Strengthens Amid Trade War Fears
The dollar has strengthened in response to Trump’s renewed tariff threats, which have revived worries about a trade war. The President is pushing for universal tariffs “much bigger” than the 2.5% proposed by his incoming Treasury Secretary. This has raised concerns about inflation, making the Federal Reserve’s two-day policy meeting, which begins later Tuesday, even more crucial.
Earnings Season: General Motors and Boeing Report Mixed Results
General Motors has kicked off a fresh batch of key earnings updates, posting a quarter sales and profit beat as it turns the corner in its EV and China business. Meanwhile, Boeing reported an annual loss of almost $12 billion, citing a strike and problems in key units. With the DeepSeek risk in mind, all eyes are on Big Tech earnings coming this week, with results from Apple, Tesla, Meta, and Microsoft on the docket.
Fed Watch: Interest Rates Expected to Remain Unchanged
As the Federal Reserve begins its two-day policy meeting, investors are keeping a close eye on interest rates. Despite recent solid economic readings, the central bank is expected to leave rates unchanged. However, the impact of Trump’s policies and the ongoing trade tensions will likely be discussed, making this meeting a crucial one for the market.
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