Stock market today: Nasdaq sinks, S&P 500 tumbles as AI fears rock tech stocks
The Nasdaq sank on Monday to lead a stock sell-off on Wall Street as a Chinese startup rattled faith in US leadership and profitability in AI, taking a hammer to Nvidia (
NVDA
) and other Big Tech stocks.
The tech-heavy Nasdaq Composite (
^IXIC
) sank 2.2%, while the S&P 500 (
^GSPC
) dropped 1.4%. The Dow Jones Industrial Average (
^DJI
) fell just below the flatline on the heels of a
winning week for the major gauges.
Markets have been rattled by
claims by China’s DeepSeek
that its AI assistant uses cheaper chips and less data than leading models, but performs equally well. A
surge in DeepSeek’s popularity
has spurred investors to question bets that AI demand-driven growth will
keep fueling gains for stocks
.
AI bellwether
Nvidia’s shares plunged over 13%
as chip-related names took a bruising. ASML (
ASML
) lost over 6%, while Broadcom (
AVGO
), and Micron Technology (
MU
) also got hammered.
Shares of Microsoft (
MSFT
) dropped more than 2% amid worries about megacaps’ hefty investment in AI. Google parent Alphabet (
GOOG
,
GOOGL
), Meta (
META
), and Amazon (
AMZN
) also lost ground as tech names faltered.
Big Tech earnings season
kicks off this week, highlighted by results from Apple (
AAPL
), Tesla, Meta, and Microsoft. Eyes will be on guidance for future profit as DeepSeek raises questions about prospects for revenue.
Investors started to flock to assets seen as safe as stocks plunged. The 10-year Treasury yield (
^TNX
) fell as much as 12 basis points to 4.50%, the lowest level in over a month, while haven currencies including the yen and the Swiss franc surged.
In the background, trade war concerns revived during a face-off between President Donald Trump and Colombia over the weekend. Trump
threatened to impose 25% tariffs
on the country’s goods in a row over deported migrants before putting the duties on pause after a deal was reached.
The dispute underlined concerns that Trump won’t hold back on turning to tariffs as a way to push through a range of policy aims.
The Federal Reserve will
hold its first policy meeting
of 2025 this week, with officials are already on watch for quick-fire moves by Trump that could
pose challenges to the central bank
. The president has called for the Fed to lower interest rates, signaling a coming clash with policymakers, who begin their two-day gathering on Tuesday.
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