U.S. stock markets saw their worst Monday since 2019 as investors feared emerging AI stock bubbles. The Chinese startup DeepSeek created a major stir on Wall Street through its R1 open-source reasoning model that surpasses OpenAI's models while costing significantly less. Such market competition from the newly emerged AI player now challenges investors to determine whether high-cost AI stock values truly exist, thus triggering major sell-off activity across stocks.
Visual indicators showed the Nasdaq Composite fell by 2.7% while the S&P 500 dropped 1.6%. Despite declines in most stocks, the Dow Jones Industrial Average dropped 55 points while Apple (AAPL, Financial), Johnson & Johnson (JNJ, Financial), and Travelers (TRV, Financial) held up against the market to balance the losses.
The tech sector's stocks suffered substantial losses when Nvidia (NVDA, Financial) and Broadcom (AVGO, Financial) declined by 15%, while AMD (AMD, Technology) dropped 5.6%. The Technology sector's Microsoft (MSFT, Financial) stood out with a decline of 3.5%, while Palantir Technology's (PLTR, Financial) slide dropped by 4.3%. The Consumer Discretionary sector player Amazon (AMZN, Financial), together with the several other major companies, lost more than 1% in stock value.
Defense-oriented sectors such as consumer staples hea, healthcare, and real estate received investor attention, which helped mitigate the market's daily damage.
