Nasdaq Dropped 3% and Nvidia Plunged 11% Amid China Competitions Worries

Barry Adams
27 Jan, 2025
New York City

Wall Street indexes opened sharply lower after investors turned cautious about the artificial intelligence-related stocks. 

The S&P 500 index and the Nasdaq Composite declined as much as 2% in early trading after a China-based startup released an open-source artificial intelligence model substantially cheaper than available in the U.S. 

China-based startup DeepSeek's artificial intelligence models passed all key metrics in competitive tests conducted by independent analysts. 

In the week ahead, investors are looking to review a flood of earnings from leading global corporations, and about 400 companies are scheduled to release earnings this week. 

This week, Microsoft, Meta, Apple, Tesla, IBM, Visa, Mastercard, Exxon Mobil, Blackstone, and Caterpillar are scheduled to release their earnings.

On Thursday, the U.S. Federal Reserve is set to hold the federal funds rate steady between 4.25% and 4.50% after three consecutive rate cuts in 2024.

Investors are also looking forward to the preliminary estimate of GDP growth rate in the fourth quarter. 

Last week, Wall Street and global indexes extended gains for the second week in a row amid rate-cut expectations and mixed but positive corporate earnings.

Despite the elevated U.S. service sector inflation, investors continue to believe that additional rate cuts are likely in the near future, driving the benchmark indexes to new highs.

Rate cut expectations dominated investor sentiment in Europe, and in China investors are hoping that Beijing will soon announce its plan to implement fiscal stimulus.

 

U.S. Indexes and Treasury Yields

The S&P 500 index declined 1.6% to 5,999.80, the Nasdaq Composite edged down 2.9% to 19,365.92, and the Russell 2000 index was down 0.3% to 2,307.74.

The yield on 2-year Treasury notes edged lower to 4.19%, 10-year Treasury notes dropped to 4.55%, and 30-year Treasury bonds inched down to 4.75%.

WTI crude oil decreased $0.31 to $74.33 a barrel, and natural gas prices edged lower by $0.31 to $3.72 a thermal unit.

Gold declined by $17.46 to 2,752.71 an ounce, and silver edged down by $0.18 to $30.39.

The dollar index, which weighs the US currency against a basket of foreign currencies, eased by 0.30 to 107.14 and traded at a two-year high.

 

U.S. Stock Movers 

Nvidia dropped 11% to $125.49, Broadcom fell 11% to $217.86, and AMD declined 4.2% to $117.80. 

Microsoft fell 4.2% to $424.0, Alphabet declined 3.5% to $194.25, and Meta Platforms eased 4.5% to $624.73.