Chinese startup DeepSeek's AI model pressured tech stocks
The last week of January started on a sour note, with the S&P 500 Index (SPX) and Nasdaq Composite (IXIC) staging their worst daily losses since December as Chinese startup DeepSeek claimed its artificial intelligence (AI) model outperformed OpenAI's. Stocks recovered some of those losses before the Federal Reserve's decision to keep interest rates steady, with Fed Chair Jerome Powell's hesitant inflation outlook adding pressure. Stocks resumed their rallies amid a slew of megacap earnings reports, with all three major benchmarks eyeing a monthly win to kick off 2025, while the Dow Jones Industrial Average (DJI) eyed a third-straight weekly gain despite a hotter-than-expected personal consumption expenditures (PCE) price index.
This Week in Tech
The emergence of DeepSeek pressured semiconductor giant Nvidia (NVDA) this week, with both Microsoft (MSFT) and Amazon.com (AMZN) also succumbing to the global tech selloff. Alibaba (BABA) made its own AI model outperformance claims, while options bulls targeted SoFi Technologies (SOFI) despite a dismal outlook. Meta Platforms (META) stock eyed a fresh record after settling a lawsuit, but IBM (IBM) and Wolfspeed (WOLF) shares moved in opposite directions after their respective quarterly reports.
Rounding out the slew of tech earnings, Apple (AAPL) stock surged after a beat-and-raise. It's also worth noting that Fortinet (FTNT) is the best stock to own in February, while Take-Two Interactive Software (TTWO) is among the worst.
Blue Chips Everywhere
In addition to tech, blue chips also dominated attention this week. Visa (V) announced a new digital wallet partnership with Elon Musk's X, and 3M (MMM) stock looked set to extend its multi-year highs. Starbucks (SBUX) shares surged to a 52-week high after earnings, United Parcel Service (UPS) attracted a downgrade, and Caterpillar (CAT) issued a lackluster forecast. To close out the week, Chevron (CVX) shared its first refining business loss in four years.
Services, Manufacturing Data on Tap
Services and manufacturing purchasing managers' index (PMI) readings are slated for release next week, alongside the ADP employment report. The earnings docket will be packed to the brim with notable reports as well, with Advanced Micro Devices (AMD), Alphabet (GOOGL), AMZN, Palantir Technologies (PLTR) and Uber Technologies (UBER) set to release results. Here's what to expect after market cap tumbles, and how we knew the path was clear for additional SPX upside.