Last week started on a sharply lower note following weekend focus on a Chinese AI platform DeepSeek, which garnered popularity for being less resource-intensive than alternatives like ChatGPT. This called into question the competitiveness of companies that are powering the AI sector and it could alter capital spending plans if the DeepSeek model proves to be as good as advertised. NVIDIA (NVDA) dropped 17% on Monday, logging its largest single-day loss in market capitalization ever. The Dow Jones Industrial Average eked out a 0.3% gain last week while the S&P 500 declined 1.0%, the Nasdaq Composite fell 1.6%, and the Russell 2000 logged a 0.9% loss.
It was a busy week that featured earnings news from about 40% of the S&P 500 in terms of market capitalization, a Fed meeting, and influential economic releases. Apple (AAPL), which closed 5.9% higher, Microsoft (MSFT), which declined 6.5%, Meta Platforms (META), which jumped 6.4%, and Tesla (TSLA), which declined 0.5% last week, were some of the top names that reported quarterly results.
The Fed voted unanimously to leave the target range for the fed funds rate unchanged. Fed Chairman Jerome Powell noted that, “with our policy stance significantly less restrictive than it had been, and the economy remaining strong, we do not need to be in a hurry to adjust our policy stance.”
Stocks sold off late Friday after the White House confirmed that 25% tariffs for Canada and Mexico, and a 10% tariff for China, will begin Saturday (February 1). The basis for the tariff actions were tied to immigration, trade deficit, and fentanyl issues.