Wall Street Rallies as Nasdaq Climbs 2% Driven by Nvidia

Jakarta - The major trading market of the United States, Wall Street, bounced back on Tuesday (January 28, 2025), following a significant sell-off the day before. This sell-off was triggered by the emergence of a Chinese artificial intelligence (AI) startup, DeepSeek. The Nasdaq saw a significant increase of 2% largely thanks to the surge in Nvidia's stock price.

According to reports, the Nasdaq Composite rose by 2.03% to reach 19,733.59 after having fallen by 3.1% previously. Meanwhile, the S&P 500 gained 0.92% to settle at 6,067.70, with the technology sector demonstrating the most significant upward movement.

The technology-focused ETF, the Technology Select Sector SPDR Fund, also experienced a jump of over 2% after suffering a drop of 4.9% on Monday (January 27, 2025). Furthermore, the Dow Jones Industrial Average increased by 136.77 points (0.31%) to stand at 44,850.35.

Nvidia became the focal point of investor interest as its shares surged nearly 9% after initially demonstrating weakness at the beginning of the session. On the previous day, Nvidia had lost 17% of its stock value, equivalent to a staggering loss of almost $600 billion in market capitalization, marking the largest single-day decline in the history of the American company.

Other technology stocks, including Broadcom and Oracle, managed to recover as well, with respective increases of 2.6% and 3.6% after facing significant corrections the day before.

The volatility within the technology sector stemmed from the rise of DeepSeek, the Chinese AI startup that recently made headlines on social media. DeepSeek launched an open-source large language model at a development cost of under $6 million, showcasing far greater efficiency compared to the substantial investments made by major tech firms in AI research.

In fact, DeepSeek surpassed OpenAI by becoming the most downloaded free app on the US App Store on Monday (January 27, 2025). This development raised concerns among investors regarding the viability of hefty investments within the AI sector, particularly concerning shares in chip companies like Nvidia.

Although Nvidia showed signs of recovery, analysts believe that the market remains shrouded in uncertainty. "I am not yet convinced that we have truly moved past the risks. The market is still trying to digest the situation," stated Thomas Martin, a Senior Portfolio Manager at Globalt Investments.

He further noted that even though the demand for computational power for data processing and data centers remains high, investor confidence has been shaken.

The market's focus is now shifting toward the upcoming earnings reports from several major technology companies known as the Magnificent Seven, which include Meta Platforms, Microsoft, Tesla, and Apple, all scheduled to report their performance this week.

Additionally, the latest interest rate decision from the Federal Reserve, set to be announced on Wednesday, is a key focal point that could impact Wall Street. Analysts expect the Fed to maintain the current interest rates; however, investors will be closely watching the statements from Fed Chair Jerome Powell regarding potential rate cuts this year.

WallStreet, Nasdaq, Nvidia