Stocks Defy Tariffs, DeepSeek Turmoil in Trump 2.0 to Post Best Presidential Start Since 2013

As the dust settles on the 2024 U.S. presidential election, investors are grappling with the implications of a Trump 2.0 administration. Despite initial market jitters, U.S. stocks have defied tariff-related volatility and DeepSeek-induced turmoil to post their best start under a new president since 2013. Let's delve into the market dynamics and potential long-term implications of these developments.



Market Resilience Amidst Tariffs

The U.S. stock market has shown remarkable resilience in the face of Trump's proposed tariffs on Canada and Mexico. Even before the tariffs went into effect, the mere possibility of them made the Federal Reserve cautious about cutting borrowing costs. However, the market has largely shrugged off these concerns, with the S&P 500 index posting gains since Trump's election victory.



DeepSeek Turmoil: A Blip or a Trend?

The launch of DeepSeek, a Chinese AI app, sent shockwaves through the tech sector, triggering a sell-off of U.S. tech stocks. The app's cost-effectiveness and open-source nature raised concerns about the bottom line of tech giants like NVIDIA, Alphabet, and Microsoft. However, the market has since recovered, and investors seem to be focusing on the long-term growth prospects of AI rather than short-term disruptions.



Long-term Implications for Tech Stocks and the Broader Market

The emergence of DeepSeek and other cost-effective AI models could lead to increased competition in the tech sector, potentially undermining the high valuations that many U.S. tech companies have enjoyed. However, the Jevons Paradox suggests that as AI models become cheaper and more efficient, overall demand for AI computing will increase, not decrease. This could drive more demand for Graphics Processing Units (GPUs), benefiting companies like NVIDIA in the long run.

In conclusion, the U.S. stock market has shown remarkable resilience in the face of tariff-related volatility and DeepSeek-induced turmoil. While the long-term implications of these developments remain uncertain, investors should focus on the growth prospects of AI and the potential benefits of increased competition in the tech sector. As always, it is essential to maintain a balanced perspective and stay informed about market trends and geopolitical developments to make informed investment decisions.