DeepSeek, Inactive Fed and Trump Chip Tariffs Mount to Squeeze Nvidia
The semiconductor sector is seeing continued weakness and the Magnificent Seven has dipped.
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On Wednesday, the action was mixed with a negative bias, as market players continued to wrestle with the fallout of DeepSeek and a Fed that is doing nothing.
Nvidia NVDA continued its struggles on news that the Trump administration may put further restrictions on the sale of chips to China. The semiconductor sector was weak again, and the Magnificent Seven dropped 1% in the regular session.
The primary message from the Fed was that it is in no hurry to do anything. Jerome Powell sounded optimistic and said the Fed was making progress with its dual mandates, but that it would have to wait to see more data before it decides what to do next. There was a slight uptick in interest rates on the news, but there wasn’t much reaction.
Breadth deteriorated during the day and closed with 3,700 gainers to 5,900 decliners, with all the indices losing ground.
After hours, Microsoft MSFT and Tesla TSLA dropped sharply on earnings news and Meta META lost some ground also. Expectations are high, and investors are waiting to hear comments on the conference calls about the impact of DeepSeek's impact
The big question is whether money flowing out of big-cap technology will flow into other areas of the market. The DJIA and the Russell 2000 IWM have been exhibiting some relative strength lately, and that could accelerate if money continues to flow out of the Magnificent Seven. There are plenty of stocks that look much healthier than the popular big-cap technology names.
Have a good evening. I’ll see you tomorrow.
At the time of publication, DePorre was long NVDA.
