By Shashwat Chauhan and Sukriti Gupta
(Reuters) – S&P 500 and Nasdaq futures steadied on Tuesday after steep losses in the previous session driven by the popularity of a low-cost Chinese artificial intelligence model that rattled stocks of U.S. companies invested in the technology.
Monday’s selloff came after Chinese startup DeepSeek launched AI models it says are on a par or better than industry-leading models in the United States at a fraction of the cost.
“The narrative on Monday was that the eye-watering sums spent on AI capex by mega-cap tech companies could be somewhat obsolete if a cheaper solution exists,” analysts at BCA Research said in a note.
AI chip leader Nvidia rose 3.5% in premarket trading, a day after $593 billion was wiped off its market value in the biggest single-session loss for any company.
Other AI-linked stocks also regained some ground, with Oracle and Broadcom rising 1.8% and 2.3%, respectively.
Power companies, which are expected to see a surge in demand from energy-intensive data centers needed to develop AI technology, were broadly higher after tumbling a day earlier. Vistra and GE Vernova added 2.9% and 2.1%.
The tech-heavy Nasdaq dropped more than 3% on Monday, its worst single-day showing in more than a month, while the benchmark S&P 500 fell close to 1.5%.
At 07:16 a.m. ET, Dow E-minis were down 51 points, or 0.11%, S&P 500 E-minis were up 6 points, or 0.1%, and Nasdaq 100 E-minis were up 45 points, or 0.21%.
Boeing edged 0.3% lower after reporting an annual loss of $11.83 billion, its largest since 2020, as the planemaker grappled with problems at its commercial and defense units and the fallout from a crippling worker strike.
Royal Caribbean gained 5.8% after the cruise operator forecast annual profit largely above expectations.
Earnings from “Magnificent 7” members Microsoft, Facebook-parent Meta, Apple and Tesla are due later this week.
Also in focus, the Federal Reserve is widely expected to hold its lending rate steady in its first interest-rate decision of the year on Wednesday, while the December reading of personal consumption expenditures (PCE) is scheduled for Friday.
A January consumer confidence reading is due at 10 a.m. ET later in the day.
U.S. President Donald Trump said late on Monday he plans to impose tariffs on imported computer chips, pharmaceuticals and steel.
A media report said newly elected Treasury secretary Scott Bessent has been pushing for new universal tariffs on U.S. imports to start at 2.5% and rise gradually by the same amount each month.
