MARKET WRAP

An eventful day with a lot to unpack. A deeper dive on all of today’s moves in the videos below as well as the end of this email. QQQ’s, down 3%. SPX/SPY down -1.5%. Small caps (which attempted a rally in the open) closed down 1.2%. There were pockets of strength as some sectors and micro sectors saw some money rotate their way (more on that below). Treasury yields were also very interesting today, with the 10yr now 4.53, down from nearly 4.80 just two weeks ago (TLT +1.2% today). BTC dipped below 100k but is back above late afternoon, now 102k. Carter Braxton Worth joins MRKT Call with updated chart analysis given today’s huge moves. Guy, Dan and Liz dive into the Deep Sink on OTT.

MRKT MATRIX: January 27, 2025

Today’s Top Stories:

• S&P 500 slides, Nasdaq drops 3% in sharp AI stock sell-off spurred by China's DeepSeek (CNBC)

• What Is China’s DeepSeek and Why Is It Freaking Out the AI World? (Bloomberg)

• Nvidia’s $560 Billion DeepSeek Rout Is Largest in Market History (Bloomberg)

• DeepSeek Won’t Sink U.S. AI Titans (WSJ)

• Apple, Meta Are Bright Spots in Monday’s Tech Selloff (WSJ)

• Perplexity AI revises TikTok merger proposal that could give the U.S. government a 50% stake (CNBC)

• These stocks are expected to move the most during this big earnings week (CNBC)

• The Extra Reward for Owning Stocks Over Bonds Has Disappeared (WSJ)

• Trump to Hold Off on 25% Colombia Tariffs, Reaches Deal on Migrants (Bloomberg)

Today’s MRKT Call is Presented by MoneyLion

DeepSeek Sparks Big Tech Sell-Off

Dan and Guy dive right into the DeepSeek news and the effects across the market today. Carton Braxton Worth updates us on some charts including QQQ and SOXX which obviously took it on the chin today. A look at NVDA, AVGO, AAPL, AMD, DELL and what’s next. Then a look at some of the counter market moves we saw in some sectors not directly affected by the DeepSeek news. Then your questions, with some really good ones, keep it up! In the QnA we cover Chinese stocks and more. 

Click here to access all of the charts mentioned in today’s MRKT Call.

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Today’s On The Tape is Presented by CME Group, iConnections and SoFi

Market Turmoil: DeepSeek's Impact on NVIDIA and Big Tech

Guy Adami, Dan Nathan and Liz Young Thomas from SoFi, dive into the market turmoil precipitated by the introduction of DeepSeek, a Chinese AI company, and its impact on major tech stocks like NVIDIA, Microsoft, and Google. The conversation addresses the broader implications of AI competition on market valuations, the potential for increased regulatory and political pressures, and the Federal Reserve's stance on interest rates. The hosts speculate on the future landscape of AI investment and its effect on sectors like software, retail, and industrials. They also touch on upcoming key economic data releases and significant earnings reports from tech giants scheduled for the week.

What’s Next?

Let’s start with some of the carnage from today. SMH dropped -10%, leading the market declines. To highlight where the selloff hit hardest, consider the moves in key names like Nvidia and Taiwan Semi, which were at the epicenter: NVDA fell -17%, TSM dropped -14%. New Fateful Eight member AVGO was down -17%, AMD slid -6%, and AMAT declined -7%. AI infrastructure-adjacent stocks like Oracle got hit hard, ORCL -15%. On top of that, the efficiency gains highlighted by DeepSeek impacted some AI energy plays, with SMR down a whopping 27% and OKLO falling -28%.

As we previewed in this weekend’s piece about DeepSeek’s potential impact on equities, we also kept an eye on stocks indirectly—and potentially positively—affected. For instance, AAPL rose 3%. Sort of funny considering one of the biggest developments over the weekend was engineers saying they were training open source versions of DeepSeek on Macs. Cloud names like CRM (+4%), WDAY (+2%), and SNOW (+0.5%) held up well if not outright benefited. These initial reactions give us a glimpse into how traders might position themselves if this story continues to unfold: sell AI infrastructure names (like semis) due to the prospect of reduced demand, and perhaps buy software companies that could avoid massive AI integration costs.

That sort of pairs trade wasn’t the only dynamic at play today. We also saw some classic sector rotations, with money flowing out of NVDA et al and into other areas. Consumer staples (+3%), healthcare (+2%), and financials (+1%). It’s worth noting that when QQQ, IWM, and Bitcoin are down while bonds and consumer staples are up, it’s a clear sign of a “risk-off” day.

Finally, the VIX spiked to 22 at the open—a possible overreaction but one that could have broader implications. First, the ease of that move higher suggests there’s likely more volatility ahead, especially with major catalysts like mega-cap earnings, the FOMC meeting, and PCE data on deck. If traders react negatively to any of these events, the stage is set for a significant volatility spike. On the other hand, if sentiment turns positive later this week, this could be a classic case of a vol spike and sell-off that pushes some participants offside, setting the stage for a sharp reversal—but most likely from lower SPX levels and VIX back into the 20s. (VIX closed 18-ish).

Boeing BA reports pre-market. Options are pricing about a 4.5% move. GM pre-marke with options pricing a 6% move. Starbucks is after the close with a 6% expected move as well.


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