Nasdaq Futures Plunge amid AI Concerns, Leading Stock Sell-off on Wall Street
Nasdaq futures tumbled significantly on Monday, triggering a widespread stock sell-off on Wall Street. The decline was fueled by concerns over US leadership and profitability in artificial intelligence (AI), driven by the emergence of Chinese startup DeepSeek.
Contracts on the tech-heavy Nasdaq 100 (NQ=F) plummeted by 4.3%, while S&P 500 futures (ES=F) lost 2.4%. Dow Jones Industrial Average futures (YM=F) also fell, shedding 0.9% or approximately 380 points.
DeepSeek's claims about its AI assistant using cheaper chips and less data while performing comparably have shaken markets. The surge in DeepSeek's popularity has prompted investors to reassess their expectations for AI-driven growth fueling stock gains.
The fallout was evident in the shares of AI bellwether Nvidia (NVDA), which tumbled by over 11% in pre-market trading. Other chip-related stocks also faced losses, with ASML dropping 9% and Arm (ARM), Broadcom (AVGO), and Micron Technology (MU) following suit.
Amid concerns over the impact on AI investments, shares of Meta (META) and Microsoft (MSFT) both declined by around 6%. Tesla (TSLA) and Amazon (AMZN) also lost ground as the tech sell-off extended across the board.
Investors sought refuge in perceived safe havens as stocks tumbled. The 10-year Treasury yield (^TNX) fell by as much as 12 basis points to 4.50%, its lowest level in over a month. Haven currencies such as the yen and Swiss franc gained strength.
Trade war concerns also resurfaced after a weekend dispute between President Donald Trump and Colombia. Trump threatened to impose tariffs on Colombian goods but later paused the duties after reaching a deal. The incident underscored concerns about the potential for Trump to resort to tariffs as a tool to advance his policy objectives.
The Federal Reserve is set to hold its first policy meeting of 2025 this week, with officials closely monitoring Trump's actions. The president has urged the Fed to lower interest rates, signaling a possible clash with policymakers who will begin their two-day gathering on Tuesday.