Wall Street is seen as positive again after the emergence of an AI application from China known as DeepSeek, which caused a critical fall in the AI-related stock market on Monday.
The creation process of DeepSeek, which uses modest resources, little energy and relies on modest data, is seen by investors as a miracle.
This shows that AI companies from China are able to challenge AI companies from the United States (US), causing investors in US AI stocks to worry.
The S&P 500 and Nasdaq Composite saw a sharp fall of 1.46% and 3.07% respectively on Monday.
Meanwhile, AI stocks fell the hardest with losses said to be large companies including Nvidia (-17%), Broadcom (-17.4%), Oracle (-13.8%), Vertiv Holdings (-29.9%) and Vistra Corp (-28.3%).
In contrast, the Dow Jones index managed to record a modest increase of 0.65%, supported by the defense sector as bond yields fell.
Investors are now awaiting economic data reports on inflation data and federal reserve decisions including the upcoming earnings report.
