The introduction of DeepSeek, a cost-effective AI solution, is generating optimism in the tech sector by promising to reduce operational expenses for major companies like Microsoft, Meta, and Alphabet. This development is seen as a "positive supply shock," potentially enhancing productivity and efficiency across industries. However, the broader market is grappling with geopolitical uncertainties, such as potential US restrictions on Chinese tech, including DeepSeek, which could cloud the long-term outlook. Despite the immediate positive sentiment, these geopolitical risks are weighing on investor confidence, contributing to the decline in the S&P 500 Index.
The Direxion Daily S&P 500 Bull 2X Shares (SPUU) experienced a significant drop, falling 3.84% to $152.34 at 14:20 on Monday, January 27.