US Stocks Drop Amid Tech Slump As Deepseek Sparks AI Anxieties
Anxiety about China’s DeepSeek led to a sharp selloff in US technology stocks and major indexes on Monday morning as investors sounded the alarm about concentration risks in tech stocks ahead of this week’s large-cap earnings.
The tech-heavy Nasdaq 100 Index fell 3.5% at the open, its biggest intraday drop since Dec. 18. The S&P 500 Index fell 2.3%, led by technology stocks, which account for the largest sector weighting in the benchmark. The Dow Jones Industrial Average fell 0.7%.
The declines in tech-heavy US indexes followed a move lower in Europe, where tech stock valuations were also in focus after China’s DeepSeek outpaced iPhone downloads over the weekend. “This is a game changer for the Mag 7 stocks because they have to rethink what their capex spending is and maybe even where they’re going to go next,” Jim Bianco, president and macro strategist at Bianco Research, said on Bloomberg TV Monday morning. “Anyone who owns anything that’s tied to the broad base of the stock market, they have concerns because of the dominance of these stocks over everyone’s investment returns.” It also highlights AI chipmaker Nvidia Corp., whose shares have soared ninefold in the past two years, making it the world’s most valuable company.
The Santa Clara, California-based company is among the worst performers in the S&P 500 and led names including Broadcom Inc., Arista Networks Inc., Amphenol Corp. and Super Micro Computer Inc. lower. Even with a modest rebalancing of large-cap tech stocks in recent months, the names continue to dominate U.S. indexes to the point where “large-cap tech is the U.S. equity market and anyone who has a mandate to own equities is by default in these Mag 7/Mag 8 names,” said Charlie McElligott, managing director and cross-asset macro strategist at Nomura Securities International.
Source: Bloomberg
