U.S. stocks plunge and recover amid DeepSeek's AI turmoil

In the U.S., stock markets have faced tremendous volatility recently, largely influenced by external factors such as the introduction of DeepSeek's AI model and corresponding uncertainties in international trade. Following the model's rise in late January, stocks first fell dramatically, with significant declines recorded in early February. Until that time, market observes noted an ongoing wariness among investors regarding economic policies and their potential impact on various sectors. Notably, on January 24, stocks closed at $142.62 before plummeting to a low of $116.66 by February 3. However, by February 19, markets rebounded slightly, with stocks finishing above $139. The fluctuations in stock prices can be traced back to the interplay between technology advancements, like the rise of DeepSeek, and political uncertainties stemming from the Trump administration's tariffs. Investors have been notably cautious, balancing their portfolios between tech stocks and more stable consumer staples in an effort to hedge against the uncertainties created by these conditions. Amid this backdrop, corporate earnings reports played a crucial role, particularly those of major companies like CrowdStrike, Eli Lilly, Nextracker, and Starbucks, which contributed to the positive momentum observed in the markets recently. Eli Lilly’s impressive fourth-quarter earnings reported on February 6 marked a significant catalyst for its stock, which surged over 13.1% following the announcement. Meanwhile, other companies like Costco also benefited from the shifting investor sentiment, as shares climbed 12.8% due to heightened interest in consumer staples amidst the chaotic market environment. The ongoing debate surrounding renewable energy policies in the U.S. further added to the uncertainty, particularly concerning companies like Nextracker, which raised its price target amid a fluctuating stock performance. As a consequence of these intertwined factors — the rise of groundbreaking technologies, changing political landscapes, and corporate earnings reports — investors have had to navigate a particularly challenging market environment over the past month. This predicament is encapsulated in the latest earnings forecasts, which are set to reveal further insights into the macroeconomic landscape and the future direction of stocks in the coming days.