Wall Street Recovers, Nasdaq Surges 2% Supported by Nvidia

Jakarta - The main stock market in the United States, Wall Street, showed signs of recovery on Tuesday (January 28, 2025), following a significant sell-off the day before, which was triggered by the emergence of a Chinese artificial intelligence (AI) startup, DeepSeek. The Nasdaq saw a remarkable increase of 2% largely due to the rise in Nvidia's stock.

According to reports, the Nasdaq Composite rose 2.03% to reach 19,733.59 after falling by 3.1% previously. Meanwhile, the S&P 500 increased by 0.92% to 6,067.70, with the technology sector experiencing the highest gains.

The Technology Select Sector SPDR Fund, a technology exchange-traded fund (ETF), also rebounded, rising over 2% after a previous decline of 4.9% on Monday (January 27, 2025). The Dow Jones Industrial Average climbed by 136.77 points (0.31%) to 44,850.35.

Nvidia gained significant attention as its shares soared nearly 9% after experiencing a drop earlier in the session. Just the previous day, Nvidia's stock had plummeted by 17%, losing almost US$ 600 billion in market capitalization in the largest one-day drop in the company’s history.

Other tech stocks, including Broadcom and Oracle, managed to recover as well, rising by 2.6% and 3.6% respectively, after facing significant corrections the day before.

The fluctuations in the technology sector were stirred by DeepSeek, a Chinese AI startup that went viral on social media. This startup recently released an open-source large language model, developed at a cost of less than US$ 6 million, which is much more efficient compared to the massive investments by large tech companies in AI research.

DeepSeek even surpasses OpenAI by becoming the most downloaded free application on the US App Store on Monday (January 27, 2025). This development has raised concerns among investors about the future of hefty investments in the AI sector, particularly regarding chip companies like Nvidia.

Despite Nvidia's recovery, analysts are cautious, indicating that the market still faces uncertainty. "I am not too sure that we have truly moved out of risk. The market is still trying to digest this situation," said Thomas Martin, Senior Portfolio Manager at Globalt Investments.

He added that while the demand for computing power for data processing and data centers remains high, investor confidence has been shaken.

Currently, market attention is shifting to the earnings reports from several major technology companies, dubbed the Magnificent Seven, which include Meta Platforms, Microsoft, Tesla, and Apple. These companies are scheduled to release their performance reports this week.

Additionally, the latest interest rate decision from the Federal Reserve, set to be announced on Wednesday, is a key focus that could impact Wall Street. Analysts expect the Fed to maintain current interest rates, but investors will be looking closely at remarks from Fed Chair Jerome Powell regarding the possibility of rate cuts later this year.

WallStreet, Nasdaq, Nvidia, Stocks, AI