This week, U.S. stocks struggled to breathe under the dual pressures of AI shocks and tariff strikes.
On Monday, DeepSeek shook Silicon Valley, causing a collective plunge in AI stocks in the U.S. market, with the market value of AI core stocks led by NVIDIA evaporating by over $80 billion that day, raising concerns that the U.S.'s absolute advantage in the AI field is weakening.
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However, as major U.S. tech giants successively released their latest financial reports, tech stocks recovered some of their losses.
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Specifically, the latest financial reports from the four major tech giants were &#34;mixed&#34;: Meta boosted market confidence with better-than-expected growth in its advertising business, Tesla stabilized its position through cost control, and Apple's service revenue hit a new high, while only Microsoft's cloud business saw a slowdown in growth, dragging down its stock price.
Ned Davis Research strategist Ed Clissold pointed out that as of Thursday, 333 stocks in the S&amp;P 500 were still rising, indicating that market resilience remains.
Meanwhile, the economic data released this week also generally met expectations. Sevens Report President Tom Essaye described the recent economic performance as &#34;just right&#34;: the fourth-quarter GDP growth rate of 2.9% showed no signs of overheating, the December core PCE price index increased by 0.2% month-on-month, confirming that inflation is controllable, and combined with a 0.7% increase in consumer spending, it paints a perfect picture of an &#34;economic soft landing.&#34;
Some analysts noted that the Federal Reserve's decision to maintain interest rates at its meeting on Thursday further reassured the market, providing a sense of &#34;policy vacuum period.&#34;
Boosted by various factors, the market steadily recovered, almost regaining previous losses, but the situation took a sharp turn on Friday.
According to a report by CCTV News on January 31, White House Press Secretary Karine Jean-Pierre confirmed at a briefing that a 25% tariff will be imposed on goods from Mexico and Canada starting February 1. Following this news, U.S. stocks turned from gains to losses, leading to a 0.7% drop in the S&amp;P 500 for the day, with the weekly decline expanding to 1%.
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Goldman Sachs economists, including Jenny Grimberg, pointed out that the current pricing of the U.S. stock market does not adequately reflect the risks of retaliatory or widespread tariffs, so once such tariffs are implemented, the market could easily see a correction.
Capital Economics Senior Market Economist James Reilly warned: &#34;This is just the beginning of uncertainty in trade policy.&#34;
Axa IM European Equities Head Gilles Guibout stated:
<blockquote>
&#34;The market has priced in a lot regarding U.S. tariff issues, but Trump could always bring unexpected risks.&#34;
</blockquote>
Morgan Stanley Wealth Management Market Research and Strategy Team Head Daniel Skelly analyzed:
<blockquote>
&#34;We have already mentioned the potential volatility surrounding tariffs, and today we saw its performance in the market. Just like the AI news on Monday, it remains to be seen how the market will digest this development from a long-term perspective.&#34;
</blockquote>
In terms of technology stocks, although Nvidia still maintains a 14% year-to-date increase, it suffered its largest single-week percentage loss since September 2022, with a market value loss exceeding $450 billion, marking the largest single-week market value evaporation in U.S. stock history.
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Truist Advisory Services data shows that hedge funds' net long positions in technology stocks have fallen to their lowest level since 2022. The market is reassessing whether technology stocks can continue to lead the bull market under the dual pressure of technological equality and geopolitical tensions.
Miller Tabak+Co.'s Matt Maley analyzed:
<blockquote>
&#34;We believe that while the AI phenomenon may/should continue to be a positive factor, it is likely not going to be as strong as the market has estimated over the past six months, and the stock market will quickly adapt to this view.&#34;
</blockquote>

DPSK

After DeepSeek's all-out assault on AI stocks on Monday, U.S. stocks have steadily recovered since Tuesday, nearly regaining previous losses. However, on Friday, Trump's tariffs struck again, causing U.S. stocks to turn from gains to losses, with the S&P 500 dropping 0.7% in a single day, expanding the weekly decline to 1%. Goldman Sachs stated that the current pricing of U.S. stocks does not adequately reflect the risks of retaliatory or widespread tariffs, so once such tariffs are implemented, the market could easily see a correction

- This week, U.S. stocks struggled amid the impacts of AI developments and new tariffs, with significant losses in AI stocks, particularly Nvidia, which saw a market value drop of over $80 billion.  
- Despite some recovery following earnings reports from major tech companies, the announcement of a 25% tariff on goods from Mexico and Canada led to a 0.7% decline in the S&P 500, increasing the weekly loss to 1%.  
- Analysts warn that the market is underpricing the risks of retaliatory tariffs, suggesting potential volatility ahead as it adjusts to these developments.

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Morgan Stanley

The US stock market faced two rounds of blows in a week: just recovering from the "DeepSeek impact," it was hit by tariffs again!