The Nasdaq and S&P 500 indices managed to post gains on Tuesday, January 28, 2025, after experiencing sharp declines earlier. This rise came after a sell-off triggered by concerns about the Chinese startup DeepSeek and the potential negative impact of artificial intelligence (AI), which could pressure the profits of major tech companies.

Nvidia’s Stock Surges Nearly 9%

According to a Yahoo Finance report on Wednesday, January 29, 2025, Nvidia’s stock surged by nearly 9%, recovering after its market capitalization plummeted by USD 589 billion in the previous session.

Thanks to the strength in Nvidia’s stock, the Nasdaq index surged by more than 2%, after previously falling more than 3%. Meanwhile, the S&P 500 index rose by 0.9%, and the Dow Jones increased by 0.3%.

Technology Sector Sees Largest Reversal in Two Years

The technology sector recorded its largest reversal in the past two days, marking the biggest rebound since the worst decline seen since March 2020 on Monday, January 27, 2025. Stocks began to trim accumulated losses after a major drop in tech stocks earlier in the week, partly influenced by rumors about DeepSeek’s cheaper AI model.

Concerns about the potential impact of DeepSeek on U.S. dominance in AI development raised questions about the ability of chip manufacturers and other tech companies to meet high earnings expectations.

With the risks posed by DeepSeek, the market’s main focus has now shifted to the financial performance reports of major tech companies that will be released this week, including Apple, Tesla, Meta, and Microsoft.

Market Focus on Trump’s Tariff Policy

Investors are also closely watching President Donald Trump’s statements on introducing stricter tariff policies, while awaiting the interest rate decision to be announced by the Federal Reserve on Wednesday. The impact of these policies will be a key part of the ongoing market discussions.

The central bank is expected to keep interest rates unchanged, taking into account the recent solid economic data.

U.S. Dollar Strengthens Amid Tariff Concerns

The U.S. dollar strengthened after the emergence of new tariff threats from Trump, which reignited fears about a potential trade war. The market’s focus briefly shifted to a short-term standoff with Colombia. Trump also expressed his desire to impose universal tariffs that are significantly larger than the 2.5% tariff previously planned by the new Treasury Secretary, Scott Bessent, to be introduced gradually.