The Dow Jones Industrial Average reversed higher as other major indexes fell hard Monday, with Nvidia's losses intensifying after a new Chinese artificial intelligence product upended conventional AI wisdom. Magnificent Seven names including Microsoft, Tesla and Alphabet also took a hit. But several issues also cleared entries on the stock market today.
The Dow industrials bucked the overall trend, surging 289 points, or 0.7%. Salesforce was off highs but finished the day up 4%. Johnson & Johnson fared best with a gain of more than 4% while Warren Buffett stock Coca-Cola rose in excess of 3%.
But bears mauled the Nasdaq composite, as it plunged more than 3%. It knifed below its rising 50-day moving average, a concerning sign. Kraft Heinz outperformed with a lift of 3%.
Stock Market Today: Consumer Staples Strong, Tech Lags
Tech exposure also hurt the S&P 500, which dropped 1.5%. It is now testing buying support at its 50-day line. AT&T shined with a lift of more than 6%.
By contrast, the Invesco S&P 500 Equal Weight exchange traded fund reversed course and eked out a marginal gain after being down much of the session.
Volume ran higher compared with Friday on both the New York Stock Exchange and the Nasdaq, according to preliminary data.
Underlining the lopsided action on the stock market today, the S&P 500 sectors were mixed, with a slight downside bias. Consumer staples and health care were in front while utilities and technology lagged.
Small caps stood in positive ground earlier in the session, but the Russell 2000 index reversed, dipping more than 1%. The bears also feasted on growth stocks, with the Innovator IBD 50 ETF near session lows as it fell 9%.
Nvidia Dives Loses Key Benchmarks On Chinese AI DeepSeek
Enthusiasm around the artificial intelligence thesis has led to a splurge of spending on AI infrastructure. But the performance of the new large language model from Chinese artificial intelligence lab DeepSeek has cast doubt on U.S. dominance in the field.
DeepSeek claims its large language model received training at a fraction of the cost of AI systems from the likes of OpenAI. Instead of proprietary AI models, DeepSeek has relied on "open source" technology.
DeepSeek's AI Assistant has just overtaken OpenAI's ChatGPT as the highest-rated free app on the Apple's U.S. App Store. Whether this ends up being a long-term pivotal point in the artificial intelligence story remains to be seen.
Backed by the likes of Microsoft, OpenAI's valuation has rocketed to dizzying levels. It got a $157 billion value assessment during a funding round in October.
China-based DeepSeek, owned and funded by Chinese hedge fund High-Flyer, apparently innovated as a way to get around U.S. sanctions on the export of AI chips to China.
"Early evidence shows that these measures [sanctions] are not working as intended," The MIT Technology Review reported. "Rather than weakening China's AI capabilities, the sanctions appear to be driving startups like DeepSeek to innovate in ways that prioritize efficiency, resource-pooling, and collaboration."
Meanwhile, DeepSeek said Monday it plans to temporarily limit user registrations after a hit from "large-scale malicious" cyberattacks.
DeepSeek Raises This Nvidia Fear, Costs $600 Billion
But while some reports say the firm has been using less powerful H800 chips, others claim DeepSeek has been able to buy more advanced H100 Nvidia AI chips despite U.S. export restrictions. Even if there is a hybrid approach in play, it seems to be going toe-to-toe with U.S. hyperscalers despite having less computing power.
B. Riley Financial chief market strategist Art Hogan said in a Monday note to clients the fact DeepSeek's new AI model can run on less-advanced chips is "challenging the dominance of high-cost chipmakers like Nvidia."
Nvidia, the biggest beneficiary of the AI bonanza, absorbed a body blow as a result. Shares gapped below its 50-day moving average in high volume, a sell signal. It went on to flash an additional sell signal by falling below its 200-day line amid a decline of 17%.
The firm's market cap has plunged by an eye-watering amount, from $3.493 trillion before the open to $2.904 trillion, a drop of nearly $600 billion. It suffered the largest one-day market cap decline for any public company on record.
Nvidia's crash was its largest percent decrease since March 16, 2020, when it plummeted 18.5%, according to Dow Jones data.
MicroStrategy Nearly Recovers
Meanwhile, MicroStrategy tumbled nearly 9% at one point during the session, but climbed back and ended the day off just 1.6%.
It now sits 5% below its 50-day moving average after undercutting the benchmark on Friday. However, it remains 65% above its rising 200-day line.
Analysts expect the firm to post losses in both 2024 and 2025, according to MarketSurge data.
3:32 p.m. ET
Stock Market Today: These Power Plays Pummeled Amid AI Woes
Two of the worst-performing equities on the stock market today were equities that had soared amid ebullience over artificial intelligence.
AI utility play Constellation Energy lagged badly as it cratered more than 21%. Remarkably, it still sits clear of its 50-day moving average despite the fact it took a dive below its 21-day line.
Constellation stock turned in a remarkable gain of 91.4% in 2024. AI bulls will surely point to the fact the stock remains up more than 22% this year despite today's painful pullback.
Meanwhile, Vistra took an even bigger hit as it crashed more than 28%. It gapped down in early action in monster volume and quickly undercut the 50-day moving average, a sell signal. Only Palantir Technologies made a better 2024 gain than Vistra, which ended the year up 261.3%.
Unlike Constellation, Vistra is now in negative territory year-to-date. It is now down nearly 3% in 2025.
Further, energy equipment stock GE Vernova also lagged as it skidded around 22%. And data analytics play Palantir is an artificial intelligence stock itself. It fell more than 7% today but got support at its 21-day line.
Magnificent Seven: Apple Strong, Microsoft Off Lows
Nvidia was having the toughest time but other so-called Magnificent Seven are also important players in the fledgling AI revolution. Most were down on the stock market today.
Microsoft, which is a major OpenAI backer, came off early lows, but remained down more than 2%.
It has now managed to rally back above its 50-day line after falling below the benchmark earlier in the session. It rebounded after getting support at the 200-day moving average.
Google-parent Alphabet, which is also an important AI play due to its Gemini AI model, was down more than 4% and has fallen below its 21-day exponential moving average. Tesla also lagged, dropping nearly 4% while Amazon.com skidded more than 1%.
Meta Platforms outperformed as it traded up fractionally. It is in the buy zone above a flat base entry of 638.40, MarketSurge analysis shows. Earnings are imminent though.
And Dow Jones stock Apple fared best of all among this group as it rose nearly 4%. Nevertheless, it continues to lag its 50-day line even as it breaks a downtrend.
2:26 p.m. ET
Bitcoin Battered Amid Tech Pressure
One asset class possibly seen as a barometer of risk appetite is cryptocurrency. Bitcoin, the most famous digital asset of all, struggled Monday. It fell nearly 6% from its 24-hour high, according to CoinDesk, trading for just over $99,000 per token.
Cryptocurrency stocks also fell. Coinbase Global skidded, undercutting its 50-day line in the process. Former IBD 50 miner Hut 8 also undercut the technical benchmark amid sharp decline.
Rival bitcoin mining play Riot Platforms plunged, while Mara, formerly known as Marathon Digital, also fell.
Stock Market Today: More Equities Clear Buy Points
Meanwhile, it was a bountiful day for breakouts despite the challenging action in the indexes. ResMed cleared a double-bottom entry of 252.36. Its relative strength line is also rising.
However earnings are due imminently, which adds risk. Earnings are a key strength for the medical products play, with its EPS Rating a stout 96 out of 99.
Stryker is one to watch as it cleared a cup-base entry of 398.20. This is an early-stage pattern.
Earnings are due tomorrow after the stock market closes. Stryker earnings are seen rising 12% this year, so the company's outlook could be key.
The surgical equipment maker manufactures products for a variety of areas, including orthopedics and trauma surgery.
12:44 p.m. ET
Outside Dow Jones: 3 Stocks Test Entries
There is far more to the stock market than artificial intelligence however. And a number of highly rated stocks attempted breakouts Monday.
Leaderboard stock ServiceNow briefly cleared a flat base entry of 1,157.90, MarketSurge analysis shows. Its relative strength line hit fresh highs, a bullish sign. Overall excellent performance shows up in its best-possible IBD Composite Rating of 99.
Earnings are due for the enterprise software firm on Jan. 29, which adds risk in the near term. An approach highlighted by Investor's Business Daily is to use options as a strategy to reduce risk around earnings. It's a way to capitalize on the upside potential of a stock's move around earnings, while reducing the downside risk.
Fellow software stock HubSpot is near a buy zone with a flat-base entry of 762.47. It comes after it bullishly rebounded from its 10-week moving average.
The Cambridge, Mass., company specializes in helping businesses automate marketing and sales operations. Wall Street expects 14% earnings growth for 2025. It has strong institutional backing, with 66% of the stock held by funds.
Those seeking some diversification away from technology may consider Darden Restaurants an option as it mounts a weekly chart flat base entry of 189.18.
This is a first-stage base for the Olive Garden parent, a bonus. The relative strength line is also climbing. It has a strong but not ideal Composite Rating of 90. Analysts see earnings accelerating to 13% growth in fiscal 2025.
11:04 a.m. ET
Chip Stocks Hit Amid AI Worries
Several AI chip plays took a hit, including Broadcom tumbled and Advanced Micro Devices.
Micron Technology also dived while Arm skidded.
And the VanEck Semiconductor ETF also got hammered.
Please follow Michael Larkin on X at @IBD_MLarkin for more analysis of growth stocks.
