US stocks stunned by tariffs and the DeepSeek "earthquake"

The US stock market experienced a volatile week, ending with a broad sell-off on January 31 due to news of President Donald Trump's new tariffs and a decline in technology stocks.

The US stock market had a volatile week, ending with a broad sell-off on January 31. (Source: Bloomberg)

At the end of the week, the S&P 500 index fell 0.50% to 6,040.53 points. The Dow Jones industrial average fell 0.75% to 44,544.66 points. The Nasdaq Composite technology index also lost 0.28% to 19,627.44 points.

The decline came after the White House announced that President Trump's tariffs would take effect on Saturday (February 1, local time). They include a 25% tariff on goods from Canada and Mexico and a 10% tariff on Chinese goods. The news triggered an immediate negative reaction from stocks linked to those markets.

Despite the decline last week, Wall Street's major indexes still recorded growth in January 2025. Specifically, the S&P 500 increased 2.7%, Nasdaq increased 1.6% and Dow Jones outperformed with an increase of 4.7%.

Tom Hainlin, senior investment strategist at US Bank Asset Management Group, said the initial market reaction was similar to the reaction to news earlier this week about DeepSeek, a Chinese artificial intelligence (AI) startup that launched a low-cost generative AI model that could impact US dominance in the industry. Hainlin said investors should wait for details on specific policies before reacting further.

Another notable factor is that economic data released on January 31 showed that the US personal consumption expenditure (PCE) price index – the US Federal Reserve's preferred inflation measure – increased 0.3% month-on-month in December 2024 and increased 2.6% compared to the same period in 2023. The figure is higher than the 2.4% increase in November 2024 and raised concerns about persistent inflation and potential impacts on Fed policy.

The market declines on Friday also followed disappointing fourth-quarter 2024 results from energy giants Chevron and Exxon Mobil, with their shares falling 4.6% and 2.5%, respectively. However, it wasn’t all bad earnings news, with Apple reporting quarterly results that beat expectations on January 30.

Overall, the week’s moves were largely shaped by the emergence of DeepSeek, a Chinese startup that has launched AI models that are said to be more efficient than their American counterparts. News of DeepSeek sparked a significant sell-off in tech stocks on Monday, sending the S&P 500 down 4.6% for its worst week since early September 2024.

Nvidia, a giant in the AI ​​chip industry, saw its stock price fall 16% weekly after plunging 17% on Monday alone. The decline means Nvidia has lost $552 billion in market capitalization in the past week.

Rob Arnott, founder of investment consultancy Research Affiliates, said no one had predicted DeepSeek’s arrival. This adds to the uncertainty surrounding the prospects of large technology companies such as Nvidia and Microsoft, raising questions about their competitive advantage.

Arnott also warned that the AI ​​“craze” may have pushed stock valuations too high. Scott Wren, senior global market strategist at Wells Fargo Investment Institute, agreed, saying the market would need a correction in the next phase.

Meanwhile, Jay Hatfield, CEO of Infrastructure Capital Advisors, expressed optimism about the next phase, saying this week's big sell-off was "overdone." He said the exaggerated concerns about DeepSeek are fading and will fade further when Amazon and Google report their business reports next week.

Investors will be closely watching the implementation of the announced US tariffs and economic data next week for further guidance on the market outlook.

Source: https://baoquocte.vn/chung-khoan-my-choang-vang-vi-thue-quan-va-con-dia-chan-deepseek-302835.html