The ProShares Ultra S&P500 ETF (SSO) is experiencing downward pressure as the broader market grapples with the aftermath of a significant selloff in technology stocks. This downturn was initially triggered by the emergence of DeepSeek, China's AI chatbot, which posed a competitive threat to tech giant Nvidia. The resulting market volatility saw Nvidia's market capitalization plummet by nearly $600 billion, impacting momentum-driven traders and causing a ripple effect across leveraged ETFs, which collectively lost around $10 billion. Although Nvidia saw a partial recovery on Tuesday, the initial shock has left investors cautious, particularly in the tech sector, which is a substantial component of the S&P 500.
Adding to the market's complexity, strategists are divided on the long-term implications of the AI-driven shakeup. While some view the disruption as a potential catalyst for extending the bull market, others remain wary of the risks associated with AI stocks. The broader market sentiment is also influenced by geopolitical factors, such as potential inflationary pressures from U.S. policy changes, which could affect interest rate expectations. These dynamics are contributing to the current volatility and uncertainty in the S&P 500, which the SSO ETF tracks.
The SSO ETF is currently priced at $97.41, reflecting a 0.46% decrease from its previous close.