BOSTON/LONDON :Technology stocks regained some ground on Tuesday with chipmaker Nvidia up about 2.5 per cent in early trading, a day after it suffered the biggest one-day market capitalization loss in history, and traders moved back out of safe-haven currencies into the dollar.
On Wall Street, the mood was calmer than it was on Monday, with the S&P 500 up about 0.5 per cent and the Dow Jones Industrial Average about 0.4 per cent higher. The tech-heavy Nasdaq added more than 1 per cent.
Nasdaq shares tumbled on Monday as chip giant Nvidia dived 17 per cent, losing nearly $593 billion of its value in the biggest one-day market capitalization loss in history. Behind the rout was the emergence of a low-cost Chinese artificial intelligence model, DeepSeek, which made investors question the dominance of AI bellwethers and their suppliers, which has sent shares of tech companies and chip firms soaring.
“We think the selling is overdone,” Wells Fargo Investment Institute strategists wrote in a note late on Monday. “DeepSeek appears to have achieved competitiveness through innovative techniques, and we think there is room for U.S. companies to adjust their training processes.”
Investors’ reassessment of developments in the AI sector will also heighten investor interest in this week’s earnings at Microsoft, Tesla and Meta. Executives can expect to be asked whether they still plan to spend so much on computing power.
Tuesday’s earnings highlight was Boeing whose shares rose about 6 per cent even after the plane maker reported its biggest annual loss since 2020, because investors saw the report not as bad as they had feared.
European tech stocks stabilized Tuesday, and the broad STOXX 600 share benchmark hit a new intraday high, a sign how strongly shares have been performing in recent weeks. [.EU]
But it was not all calm, as selling pressure remained in Japan for a second day with Nvidia supplier Advantest now down 19 per cent in two days. [.T]
DON’T FORGET TARIFFS
While DeepSeek gave investors something to think about other than President Donald Trump’s tariffs and other policies, trade tensions remained in the mix, and also supported the dollar and drove investors back out of Treasuries.
New U.S. Treasury Secretary Scott Bessent is pushing for a gradual rise in universal tariffs starting from 2.5 per cent, and potentially up to 20 per cent, the Financial Times reported, and Trump later said that he wanted “much bigger” tariffs than 2.5 per cent and was considering targeted duties on products, such as steel, copper and semiconductors.
At the same time, U.S. consumer confidence weakened for a second straight month in January amid renewed concerns about the labor market and inflation.
The euro was down about 0.6 per cent, while safe-haven currencies, which had appreciated Monday, gave back their gains. The dollar was last up 0.6 per cent on the Japanese yen and up 0.24 per cent on the Swiss franc.
Similarly, U.S. Treasuries, which rallied on Monday as part of the risk-off move, reversed course and benchmark 10-year yields were last 3.9 basis points higher at 4.567 per cent. [US/]
Of note in European rates markets was the spread between French and German 10-year yields, which blew out last year on French political uncertainty. The spread narrowed to 72 bps, its tightest since mid November, as investors hope the current government may be able to pass a budget. [GVD/EUR]
There are also central bank meetings for bond and currency investors to grapple with. The Federal Reserve is expected to keep rates steady at its meeting which concludes on Wednesday, and the European Central Bank is expected to cut rates by 25 bps on Thursday.
Oil prices recovered some of Monday’s losses, with benchmark Brent crude futures up 0.3 per cent at $77.33 a barrel and gold, which had slipped as investors liquidated bullion to cover losses, added 0.5 per cent to $2,755 an ounce.
