US Stock Markets Find Stability After AI-Driven Selloff
US equities traded in a largely steady pattern on Tuesday, showing signs of stabilization following the sharp losses experienced in the previous session. The market's recovery attempt came as investors grappled with mounting fears that artificial intelligence could fundamentally disrupt businesses and industries across the economy.
Major Indexes Show Mixed Performance
The S&P 500 index slipped a modest 0.1% during Tuesday's trading session, following a more substantial 1% decline on Monday. This previous drop had been fueled by growing concerns about AI's potential long-term economic impact. The Dow Jones Industrial Average remained essentially unchanged, demonstrating remarkable resilience, while the technology-heavy Nasdaq composite edged 0.2% lower, according to Associated Press market data.
Market participants appeared to be balancing their disruption anxieties against evidence of continued corporate investment in AI infrastructure. This delicate equilibrium helped prevent further significant declines across major benchmarks.
AMD-Meta Agreement Provides Market Support
Advanced Micro Devices (AMD) emerged as a key sentiment booster after announcing a significant multi-year agreement to supply chips that will power Meta Platforms' artificial intelligence expansion. This strategic partnership could eventually reach an approximate value of $100 million and includes Meta taking a 10% ownership stake in the semiconductor manufacturer.
The announcement triggered a substantial premarket surge of more than 10% in AMD shares, providing crucial support to technology sector sentiment. Meanwhile, Meta shares experienced a minor decline of less than 1% following the news. IBM managed to recover part of its previous day's substantial decline, which had represented its steepest single-day drop since the year 2000.
Futures Pointed to Early Rebound
Earlier in the trading session, Wall Street futures had indicated a potential market rebound. S&P 500 futures rose 0.1%, Dow futures gained 0.2%, and Nasdaq futures climbed 0.3% before regular trading commenced. However, investor caution intensified following a concerning report from New York-based Citrini Research.
The research outlined a scenario where AI dominance could potentially erode the "human-centric consumer economy," warning that delayed policy responses might accelerate a deflationary cycle. This analysis contributed to the market's overall cautious tone despite the early positive indicators.
Nvidia Earnings in Focus
Market attention is now shifting decisively toward Nvidia's upcoming earnings report scheduled for Wednesday. Concerns are mounting that heavy spending by technology giants such as Alphabet and Amazon on AI chips may not generate sufficient long-term returns to justify current investment levels.
This earnings report is widely viewed as a crucial indicator of whether the AI investment boom can sustain its momentum amid growing questions about economic viability and potential market saturation.
Retail and Global Market Developments
Home Depot shares rose 2.4% after the home improvement retailer exceeded Wall Street's fourth-quarter expectations. This positive performance occurred despite continued consumer caution linked to an ongoing housing market slowdown.
European markets presented a largely flat picture during midday trading. Germany's DAX index declined 0.1%, while Paris' CAC 40 gained 0.1%, and London's FTSE 100 remained essentially unchanged.
Asian Markets Deliver Mixed Results
Asian equity markets delivered decidedly mixed performances. Japan's Nikkei 225 climbed 0.9%, supported by gains in chip-related stocks including Advantest and Disco Corp. Mainland Chinese markets advanced after reopening from a weeklong holiday, with the Shanghai Composite rising 0.9%.
Hong Kong's Hang Seng index fell 1.8% as investors booked profits following recent gains. South Korea's Kospi surged 2.1% to record highs, led by semiconductor sector gains. Samsung Electronics rose 3.6% while SK Hynix advanced 5.7%.
Australia's S&P/ASX 200 edged marginally lower, while Taiwan's Taiex gained 2.8%. India's Sensex declined 1.3% during the trading session.
Political and Commodity Market Movements
Investors are closely monitoring President Donald Trump's upcoming State of the Union address for greater clarity on US tariff policy. This attention follows last week's Supreme Court ruling against sweeping import taxes, creating uncertainty about future trade policy direction.
In commodity markets, US benchmark crude oil rose 11 cents to $66.42 per barrel, while Brent crude gained 7 cents to $71.18. These increases occurred amid concerns about potential US military action against Iran and its implications for global oil supplies.
The US dollar strengthened against the Japanese yen, reaching 155.86 yen compared to 154.66 yen previously. The euro slipped to $1.1777 against the dollar. Bitcoin experienced a 4.3% decline, falling to $63,180 amid broader cryptocurrency market volatility.
