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U.S. equity futures bounced modestly higher in early Tuesday trading, but investors and markets remain rattled by yesterday’s selloff that wiped more than a $1 trillion in value from the world’s biggest tech companies and tested spending and cost assumptions in the global AI race.
Stocks ended firmly lower last night, lead by 3.07% decline for the Nasdaq and a 17% plunge in Nvidia (NVDA)  shares that loped $593 billion from its market value in the biggest single-day loss on record following the emergence of China-based DeepSeek’s AI agent.
The new AI model claims to have cost less that $6 million and commands performance benchmarks equal to or better than rivals such as OpenAI’s ChatGPT and Meta Platform’s (META)  Llama 3, each of which cost around $500 million.
President Donald Trump described the emergence of DeepSeek as a “wake up call’ for the tech industry, which is forecast to spend more than $2 trillion over the next three years on AI developments.Â
Nvidia shares are looking to claw back some of yesterday’s losses in early trading, but investors are likely to focus first on commentary from Meta, Microsoft (MSFT)  and Apple (AAPL)  on AI developments this week as each posts December quarter earnings starting on Wednesday.Â
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Stocks in the meantime are set for a modest bounce higher, with the Nasdaq called 161 points into the green with futures tied to the S&P 500 suggesting a 27 point advance at the opening bell.
Gains are likely to be tempered, however, by the sharp move higher in the U.S. dollar, which rose 0.48% against a basket of its global peers in overnight trading following comments from President Trump that he would like to see “far higher” tariffs that the 2.5% universal levy proposed by newly-confirmed Treasury Secretary Scott Bessent.Â
Related: DeepSeek rattles tech stocks ahead of Microsoft, Meta earnings
“These comments contradict the markets’ tentatively sanguine assumption that tariffs would be more of a case-by-case measure (like for Colombia) and not universal,” said ING strategist Francesco Pesole.
“Probably, the fact that these plans are being actively laid out by the Treasury and not simply hinted at by Trump means the additional risk premium gap now embedded into dollar crosses may prove harder to close,” he added.
Treasury bond yields were also inching higher ahead of the start of the Federal Reserve’s two-day meeting in Washington, although rate traders are pricing in little chance of a policy change from Chair Jerome Powell and his colleagues until at least June.
Benchmark 10-year Treasury note yields were last marked 4 basis points higher from Monday’s close at 4.567% while 2-year notes rose to 4.224% following a mixed auction of $69 billion in new paper on Monday.
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In overseas markets, Europe’s Stoxx 600 was marked 0.72% higher in Frankfurt, with Britain’s FTSE 100 rising 0.55% in London.
Overnight in Asia, tech losses held down benchmarks across the region, with Japan’s Nikkei 225 falling 1.39% in Tokyo and the MSCI ex-Japan index sliding 0.24% into the close of trading.
Related: Veteran fund manager issues dire S&P 500 warning for 2025
