Weekly Market Recap: AI Disruption and Tariff Uncertainty Yield Bumpy Ride
Amidst a month of record highs, the past week has been a rollercoaster for the S&P 500 (^GSPC) and Nasdaq Composite (^IXIC).
AI Jitters and Market Correction
Early in the week, concerns emerged over DeepSeek's low-cost AI model, casting doubt on the sustainability of AI-related investments and leading to a 3% drop in the Nasdaq. However, the market quickly recovered, erasing most of the decline.
Tariff Uncertainty and Market Sentiment
President Trump's announcement that tariffs would remain in place triggered a sell-off in the S&P 500 and Nasdaq.
Market Sensitivity to Headlines
Strategists attribute the market's sensitivity to external events, including geopolitical tensions, tech stock volatility, and the heightened expectations for 2023.
Headline Risk and Market Resilience
BMO's Brian Belski emphasizes the ongoing risk of headline-driven market movements. However, the market's resilience and focus on earnings fundamentals provide a stabilizing force.
Earnings Outlook Remains Strong
Despite short-term market volatility, the earnings outlook remains positive, providing a long-term driver for stock performance.