U.S. stocks ended higher on Tuesday, with the S&P and the Nasdaq recovering most of their losses from the previous session that saw a Wall Street bloodbath, triggered by the sudden emergence of Chinese AI startup DeepSeek. All three major indexes ended in positive territory.
The Dow Jones Industrial Average (DJI) gained 0.3% or 136.77 points, to finish at 44,850.35.
The S&P 500 jumped 0.9% or 55.42 points, to close at 6,067.70 points, snapping its two-day losing streak. Technology stocks were the biggest gainers.
The Technology Select Sector SPDR (XLK) gained 2.7%. However, the Utilities Select Sector SPDR (XLU) lost 1.4%, while the Real Estate Select Sector SPDR (XLRE) gave up 1.2%. Eight of the 11 sectors of the benchmark index ended in negative territory.
The tech-heavy Nasdaq rose 2% or 391.75 points to end at 19,733.59 points, snapping its two-day losing streak.
The fear-gauge CBOE Volatility Index (VIX) was down 8.32% to 16.41. Decliners outnumbered advancers on the NYSE by a 1.13-to-1 ratio. On the Nasdaq, a 1.01-to-1 ratio favored declining issues. A total of 13.87 billion shares were traded on Tuesday, lower than the last 20-session average of 15.5 billion.
Stocks rebounded on Tuesday, with major indexes recovering most of their losses suffered in the previous session. Tech stocks led the rally as investors closely watched NVIDIA Corporation’s (NVDA) intraday fluctuations. The AI darling briefly incurred losses earlier in the session but bounced back to end nearly 9% higher.
The semiconduction giant saw its shares plummet nearly 17% on Monday, with $589 billion wiped off its market value following the DeepSeek threat.
On Monday, DeepSeek’s, sudden emergence challenged the U.S. dominance in artificial intelligence. The Chinese AI startup last month rolled out R1, an open-source free assistant, which the company claims used cheaper chips and less data. The AI model reportedly cost less than $6 million to develop.
It also surpassed several OpenAI tests and, over the weekend, exceeded its U.S. competitor ChatGPT in downloads from Apple Inc.’s (AAPL) App Store. DeepSeek’s emergence raised doubts about investor expectations that AI will drive demand throughout the supply chain, including chipmakers and data centers.
However, these fears somewhat eased on Tuesday, with tech stocks making a solid rebound. Shares of Broadcom, Inc. (AVGO) gained 2.6%, while Oracle Corporation (ORCL) rose 3.6%. Broadcom has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
