Nasdaq and S&P 500 Rebound Amid Tech Stock Rout, Nvidia Surges
The tech-heavy Nasdaq and S&P 500 rebounded on Tuesday, following a sharp sell-off spurred by concerns over valuations in Big Tech companies.
The Nasdaq Composite (^IXIC) gained 2.00%, recovering from a closing loss of over 3%. The S&P 500 (^GSPC) rose 0.94%, while the Dow Jones Industrial Average (^DJI) increased 0.31%. Stocks began to recover from Monday's tech-led rout, which stemmed from a potential threat to US AI leadership posed by Chinese startup DeepSeek's cheaper AI model.
Investors assessed a return to a tougher tone on tariffs from President Donald Trump. Meanwhile, the US dollar (DX=F) strengthened after renewed tariff threats.
Amid these concerns, the Federal Reserve began a two-day policy meeting, where the impact of Trump's policies is expected to be discussed. However, the central bank is expected to leave interest rates unchanged.
General Motors (GM) released positive earnings results, offsetting losses reported by Boeing (BA). Focus remains on upcoming earnings from tech giants Apple (AAPL), Tesla (TSLA), Meta (META), and Microsoft (MSFT).
Nvidia (NVDA), a major AI chip manufacturer, rose 7% after plunging 17% on Monday. The rebound shows that investors are reassessing the impact of DeepSeek's AI model on the US AI sector.
Despite the rebound, analysts are monitoring the potential risks posed by AI-exposed power stocks, which suffered losses on Monday. Power giant Constellation Energy (CEG) remained relatively flat, while Vistra Corp (VST) gained 4%.
The market is also grappling with mixed signals from President Trump's orbit regarding tariffs, adding to the uncertainty.
OpenAI announced the launch of ChatGPT Gov, a tailored version of its AI assistant for US government agencies, aiming to strengthen national security and public services.