Mild Rebound On Wall Street After Investors Reassess AI Infrastructure Spending Needs

Barry Adams
28 Jan, 2025
New York City

Wall Street indexes attempted a rebound a day after a sharp sell-off that saw leading artificial intelligence company stocks plunge as much as 17%. 

Nvidia plunged 17%, Broadcom declined 9%, and AMD dropped 5%.

The S&P 500 index edged up 0.3%, and the Nasdaq Composite advanced 0.5%, but investors remained cautious about investment by large tech companies in artificial intelligence infrastructure. 

The emergence of cheaper and more cost-competitive artificial models by China's upstart DeepSeek raised doubts about the need to purchase expensive servers using the latest advanced chips for building large language models using artificial intelligence. 

China's DeepSeek claims it developed its advanced chatbot for $6 million, and the app with the open-source models was most downloaded on the Apple App Store in January, displacing ChatGPT. 

Investors are hoping that the latest wave of nationwide strikes organized by the new presidential administration is likely to have less impact on the labor market. 

Despite the widely advertised and wild claims by the Trump administration of more than 12 million illegal immigrants, federal government agencies managed to arrest less than 1,000 illegal immigrants in multiple raids over the last three days. 

Moreover, in the first week of the new presidential administration, at least 12,000 illegal immigrants have crossed the southern border, according to several independent analysts tracking migrant flows.

Former President Biden's administration deported more than 4 million illegal immigrants, sharply higher than the 1.6 million deported under the first presidential administration of Donald Trump. 

 

Durable Goods Orders Extended Decline In December 

On the economic front, new orders for durable goods declined in four of the last five months, the U.S. Census Bureau reported Tuesday. 

Durable goods orders decreased 2.2% from the previous month to $276.1 billion, and this followed a 2% decline in November. 

On an annual basis and not adjusted for seasonal factors, durable goods orders dropped nearly 4% to $288.6 billion in December from $299.9 billion a year ago. 

Non-defense capital goods orders declined to $95 billion from $115.2 billion, and orders excluding aircraft orders, which are considered a proxy for business spending, rose to $78.4 billion from $76.2 billion a year ago.

 

U.S. Indexes and Treasury Yields

The S&P 500 index declined 0.1% to 6,006.00, the Nasdaq Composite edged up 0.2% to 19,379.12, and the Russell 2000 index was down 0.1% to 2,281.08.

The yield on 2-year Treasury notes edged higher to 4.22%, 10-year Treasury notes climbed to 4.56%, and 30-year Treasury bonds moved up to 4.80%.

WTI crude oil increased $1.05 to $74.21 a barrel, and natural gas prices edged lower by $0.16 to $3.54 a thermal unit.

Gold rose by $8.28 to 2,749.80 an ounce, and silver edged down by $0.03 to $30.14.

The dollar index, which weighs the US currency against a basket of foreign currencies, gained 0.57 to 107.91 and traded at a two-year high.

 

Stock Movers 

Nvidia rebounded 3.2% to $122.38, Broadcom jumped 3.2% to $208.50, Meta Platforms advanced 1% to $665.63, and Alphabet Inc. gained 0.7% to $193.08. 

Boeing Company declined 0.3% to $175.35 after the aviation company reported higher-than-expected losses and weaker-than-expected revenue in the fourth quarter.