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The stock market was sent reeling earlier this week as Chinese AI startup DeepSeek unleashed chaos, triggering a $1 trillion tech selloff that erased $600 billion from Nvidia’s (NVDA) market value in a single day. The shockwaves came after DeepSeek revealed a ChatGPT competitor developed for just $6 million - a fraction of the hundreds of billions that U.S. tech giants plan to invest in AI.
On Jan. 27, Nvidia shares plunged around 17% as investors panicked about this budget AI breakthrough. The tech selloff intensified as other major players like Microsoft (MSFT) and Alphabet (GOOGL) saw their shares tumble. “Investors have extrapolated way too far, too fast about what's happening [with DeepSeek's AI progress],” cautioned Jim Thorne of Wellington-Altus in a Tuesday MarketWatch interview, noting the broader market’s resilience beyond AI.
While investors are in a state of panic, SocGen analysts led by Kabra Manish have spotted an opportunity: the SPDR S&P 500 ETF (SPY). According to the firm, this “America first” fund lets investors back the broader U.S. economy while avoiding the worst of AI’s wild swings. With its balanced exposure and proven track record, here’s why Wall Street is watching SPY as a smart play in this tech showdown.
Overview of SPDR S&P 500 ETF
The SPDR S&P 500 ETF (SPY), run by State Street Global Advisors since its 1993 launch, remains a go-to for investing in America’s biggest companies. With $636 billion in assets, this ETF mirrors the S&P 500 Index ($SPX), holding all 500 stocks in their proper proportions.
SPY shows steady growth, up 2.6% in the year to date. Its 24.03% gain over the past year proves it can handle tech sector shakeups.
Trading activity jumped from 41.6 million to 57.4 million shares weekly as more investors seek stability through broad market exposure.
The fund spreads risk across 500 companies, although its top 10 stocks make up 36.81% of the portfolio. Its top 10 holdings include: Nvidia (NVDA) (6.15%), Apple (AAPL) (7%), and Microsoft (MSFT) (6.47%). Amazon (AMZN) (4.33%), Meta (META) (2.86%), and Alphabet (GOOGL) (2.2%) follow, with Broadcom (AVGO) (1.88%), Tesla (TSLA) (2.16%), Alphabet’s Class C (GOOG) (1.82%), and Berkshire Hathaway (BRK.B) (1.68%) rounding out the top.
This mix captures America’s economic drivers.
Costs stay low with a 0.0945% management fee, or $9.45 on an initial $10,000 investment. Dividend payouts sweeten the deal, with an annual yield of 1.17%.
The fund’s structure lets it quickly adjust to market moves, keeping pace with the index while offering easy entry and exit during disruptions like the DeepSeek situation. This efficiency explains why experts like Société Générale see SPY as the top “America first” choice.
Structural Advantages in Uncertain Times
Trump’s business-friendly policies are a key driver of SPY companies this month. Trump’s quick approval of oil drilling permits and cutting back on electric car rules has been great news for carmakers like General Motors (GM) and Ford (F). Big oil companies are loving it too; Exxon Mobil (XOM) and Chevron (CVX) shot up 11% and 9%, respectively, after these changes kicked in.
Trump’s new mining rules are a big deal for tech companies that make computer chips. Nvidia and Broadcom need these materials badly. His proposed move to drop corporate taxes from 21% to 15% could put more money in the pockets of many companies of the SPY.
The Bottom Line on the SPY ETF
While DeepSeek’s AI breakthrough rattled tech stocks, SPY offers a strategic shield against single-sector chaos. With a 24.03% return over the past year and broad exposure across 500 companies, this ETF provides the ideal mix of tech upside and traditional sector stability. It’s the smartest way to ride out AI market turbulence while maintaining “America first” positioning.
