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ED CARSON

Dow Jones Futures Dive As Nvidia, AI Stocks Sell Off On DeepSeek

Dow Jones futures fell sharply early Monday along with S&P 500 futures and especially Nasdaq futures as Nvidia, Broadcom, Meta and other AI-related stocks plunged over AI progress from China's DeepSeek.

Huge earnings and the latest Federal Reserve meeting on tap this week.

Tesla, Meta Platforms, Microsoft, Apple and ServiceNow report earnings this week, along with many other big and leading stocks.

They will have a huge impact on the broader market and especially on the likes of Nvidia, Broadcom, Google-parent Alphabet, Amazon, Salesforce.com and Arista Networks.

But all of that appears to be taking a back seat as DeepSeek deep-sixes AI stocks.

Dow Jones Futures Today

Dow Jones futures fell 0.65%. S&P 500 futures sank 2%. Nasdaq 100 futures tumbled 3.5%. Those are well off their worst levels.

The 10-year Treasury yield tumbled to 4.53%.

A China manufacturing index unexpectedly fell 1 point to 49.1, back below the neutral 50-day level. The non-manufacturing index sank two points to 50.2 vs. views for 52.1.

Remember that overnight action in Dow futures and elsewhere doesn't necessarily translate into actual trading in the next regular stock market session.

AI Stocks Face DeepSeek Threat

Nvidia and Broadcom dived more than 10% early Meta, with Arista Networks, Meta, Google and many others down significantly, As DeepSeek concerns spread over the weekend.

Chinese AI lab DeepSeek recently released a powerful AI model that it claims cost just $5.6 million to build, using less-powerful chips. If true — or partially true — that could undermine demand for super-pricey AI chips and other gear.

That, of course, would undermine the valuations of Nvidia and AI hardware plays. It could also have an impact on valuations for AI chip buyers, who were using their massive size to buy up chips that one else could to lead in AI offerings.

Nuclear and other power plays also were big losers early Monday, including Vistra and Oklo. So were AI-related cooling plays such as Modine Manufacturing.

AI infrastructure stocks got a boost last week from the big Stargate project announced by President Trump, led by Oracle, SoftBank and OpenAI. But, despite Meta's big capital spending plans, many AI hardware stocks fell Friday, including Nvidia, as the implications of the DeepSeek news first started to spread on Wall Street.

Join IBD experts as they analyze leading stocks and the market on IBD Live

Stock Market Rally

The stock market rally saw broad weekly gains despite Friday's losses. The Dow Jones led, the S&P 500 hit record highs and many tech growth leaders among the winners.

The Dow Jones Industrial Average popped 2.15% in last week's stock market trading. The S&P 500 index gained 1.7%. The Nasdaq composite climbed 1.65%, but hit resistance Friday just below all-time highs, closing below 20,000.

The small-cap Russell 2000 advanced 1.4%, but hit resistance right at the 50-day line on Friday.

A large number of stocks from the tech, financial, industrial and energy fields made big moves in the past several days, along with various names from other groups.

Treasury Yields, Oil Prices

The 10-year Treasury yield rose one basis point to 4.62% after hitting 4.55% intraday Tuesday. The coming Fed meeting may be relatively low key. Policymakers are a lock to stand pat on Wednesday and may continue to do so until May, June or beyond.

U.S. crude oil futures sank 3.5% to $74.66 a barrel last week.

Time The Market With IBD's ETF Market Strategy

Big-Cap Earnings, Stocks

What Microsoft, Meta, ServiceNow and Apple have to say about AI monetization and capital spending will be key. Meta already preannounced strong 2025 capex plans on Friday. That's key for Arista Networks, which counts Meta and Microsoft as huge customers.

Meta stock broke out Friday. ServiceNow stock is near a buy point. So is Microsoft stock. Apple stock is in a downtrend, near the 200-day line.

As for related stocks, Amazon stock is in a buy zone while Google arguably is. Nvidia, Broadcom and Salesforce stock are all close to buy points, while Arista is extended.

Tesla stock has a new base and is close to an early entry despite sliding 4.7% for the week. Shares undercut the 21-day line but held the 10-week line. The EV giant just launched the refreshed Model Y in the U.S. and Europe late Thursday, but the focus may be on progress for self-driving, robotics and more that have fueled TSLA stock.

Tesla, Meta, Microsoft and ServiceNow all report Wednesday night, hours after latest Fed meeting ends. Apple stock is due late Thursday.

These stocks, including EV maker Tesla, were lower early Monday amid the big sell-off in futures.

Why This IBD Tool Simplifies The Search For Top Stocks

What To Do Now

The stock market rally has shown real strength, with the indexes clearing key levels and a large number of leaders breaking out or flashing buy signals. Yes, the Nasdaq is hitting resistance at record highs and the Russell 2000 still faces the 50-day, but the action is normal after recent gains.

But the tech sector is now selling off on DeepSeek fears. The AI boom has led a massive stock market rally over the past two years. If the underpinnings of that rally are undermined, well, the potential implications could be dire.

Of course, perhaps the DeepSeek news isn't as negative as first thought and AI stocks quickly rebound. But investors have to react to what is happening, not what they wish were happening.

The next two weeks will be the peak of earnings season. Throw in the Fed meeting, key economic data and President Trump touting Feb. 1 as a possible day for big tariff hikes, and there's a lot of uncertainty in the near future.

So stay engaged and have your exit strategies ready.

Read The Big Picture every day to stay in sync with the market direction and leading stocks and sectors.

Stocks On Key IBD Lists

Nvidia stock, ServiceNow and Meta are on IBD Leaderboard, with Tesla stock on the Leaderboard watchlist. Amazon stock is on SwingTrader. Microsoft stock is on IBD Long-Term Leaders, with ServiceNow on the LTL watchlist. Nvidia, ServiceNow and Arista stock are on the IBD 50. ServiceNow, Nvidia, Arista Networks and Broadcom stock are on the IBD Big Cap 20. Nvidia and ServiceNow stock are on IBD Sector Leaders.

Please follow Ed Carson on Threads at @edcarson1971 and X/Twitter at @IBD_ECarson for stock market updates and more.

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