Futures Take Beating

Stock futures were down sharply on Monday on concern about an artificial intelligence stock bubble popping because of the emergence of Chinese startup DeepSeek that possibly made a competitive AI model for a fraction of the cost.Futures for the Dow Jones Industrials tumbled 417 points, or 0.9% to 44,185.Futures for the much-broader index fell 141 points, or 2.3%, to 5,992.25.Futures for the tech-heavy NASDAQ plummeted 855.76 points, or 3.9%, to 22,055.50. Last week, DeepSeek released an open source AI model that reportedly outperformed OpenAI’s in several tests. The company had launched an open source large-language model in December for what it says was less than $6 million. While Wall Street questions that figure, the foreign startup is still raising concern that the billions being spent to build out big AI models could be done for much more cheaply.AI darling Nvidia dropped 12% in the premarket, Broadcom lost 13% and AMD shed 6%. Microsoft lost 7%. Palantir was hit for 8%. Other mecacap tech names Amazon and Meta Platforms also shed more than 4% each.Derivative plays from the AI buildout like power providers were also hit big. Constellation Energy lost 14% and Vistra plunged 11%.On top of that, the Federal Reserve will hold its first policy meeting of the year, deciding on the level of interest rates on Wednesday. Fed funds futures are pricing in a more than 99% chance that the central bank leaves interest rates unchanged. In Japan, the Nikkei 225 fell 0.9% Monday, while in Hong Kong, the Hang Seng index forged ahead 0.7%. Oil prices sagged 55 cents to $74.11 U.S. a barrel. Gold prices dropped $8.20 to $2,770.70 U.S. an ounce.