The Nasdaq Composite and S&P 500 rebounded on Tuesday after a sharp stock sell-off caused by concerns over Big Tech’s AI investments. Investors also analyzed the impact of Donald Trump’s tariff policies, ahead of a crucial Federal Reserve meeting where economic strategies will be discussed.
The tech-heavy Nasdaq Composite (^IXIC) surged 1.8%, recovering from a 3% drop in the previous session. The S&P 500 (^GSPC) climbed nearly 0.8%, while the Dow Jones Industrial Average (^DJI) rose 0.4%.
AI Competition and Market Recovery
Monday’s tech-led market dip followed rising interest in DeepSeek AI, which reportedly offers a more affordable AI model. This development sparked concerns about U.S. tech leadership, raising doubts about chipmakers’ ability to meet high earnings expectations.
Leading the recovery, Nvidia (NVDA) jumped 7%, bouncing back from a 17% plunge that erased $589 billion in market value in a single session.
Tariffs, Federal Reserve Meeting, and Market Outlook
The U.S. dollar (DX=F) strengthened amid renewed tariff concerns from Donald Trump, who proposed imposing higher universal tariffs beyond the 2.5% planned by incoming Treasury Secretary Scott Bessent. This move reignited fears of a trade war, raising concerns about its impact on global inflation.
With the Federal Reserve’s two-day policy meeting beginning Tuesday, investors are closely watching for signals on interest rates, though the Fed is widely expected to hold rates steady amid strong economic indicators.
Corporate Earnings in Focus
As earnings season continues, General Motors (GM) posted strong quarterly sales and profit results, showing progress in its EV and China divisions. Meanwhile, Boeing (BA) reported a $12 billion annual loss, citing a worker strike and production issues.
With DeepSeek’s AI competition in mind, investors are turning their focus to Big Tech earnings this week. Key reports are expected from Apple (AAPL), Tesla (TSLA), Meta (META), and Microsoft (MSFT), which could influence market sentiment in the coming days.
