To The Moon

1. Tech Stocks Rebound After AI Shock

A day after DeepSeek’s surprise emergence sent tech stocks tumbling, markets rebounded as investors reassessed AI’s impact. The $.IXIC(.IXIC)$ rose 2%, the $.SPX(.SPX)$ gained 0.9%, and the Dow Jones Industrial Average added 0.3%. $NVIDIA(NVDA)$ , which had lost 17% on Monday, surged 8.9% as investors saw opportunities beyond the initial panic.

$NVDA

2. AI’s Shift: From Hardware to Software?

While DeepSeek raises questions about the need for costly AI hardware, a broader and cheaper rollout of AI technology could benefit software companies. Analysts suggest that software-driven firms like $Salesforce.com(CRM)$ , $Microsoft(MSFT)$ , and Oracle stand to gain as the industry pivots toward AI-driven applications rather than expensive infrastructure. Microsoft’s upcoming earnings report will provide further insight into this shift.

3. Federal Spending Freeze Sparks Chaos

Adding to market uncertainty, the Trump administration abruptly froze $3 trillion in federal grants and loans, affecting local governments, hospitals, schools, and businesses. The move triggered panic, particularly in the healthcare sector, where states like Connecticut and Oregon reported Medicaid payment disruptions. The S&P 500 healthcare sector dipped 0.7% in response.

$XLV

4. Legal Challenges and Market Stability

Shortly after market close, a federal judge blocked the spending freeze, providing temporary relief. Further legal arguments are set for Monday. Meanwhile, Wall Street’s "fear gauge," the CBOE Volatility Index, fell sharply, suggesting investors are cautiously optimistic despite political turmoil.

$VIX

Conclusion

Tech stocks have regained some footing, but uncertainty remains as AI shifts from hardware to software and federal funding policies disrupt key sectors. The coming days will be critical for determining the long-term impact of both trends.

The Calendar

ASML, Meta, Microsoft, MSCI, Tesla, T-Mobile, Western Digital …

The Federal Open Market Committee announces its monetary policy decision. The FOMC is widely expected to keep the federal-funds rate unchanged at 4.25% to 4.5%. With the economy and labor market still resilient, and inflation stubbornly above the Federal Reserve’s 2% target, the central bank is in wait-and-see mode as it assesses incoming economic data.

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This summary is for informational purposes only and does not constitute financial or investment advice. Always consult a professional before making investment decisions.