Dow Jones Recovers, but Tech Struggles Amid AI Competition and Trade Tensions

The Dow Jones Industrial Average (DJIA) initially tumbled Monday morning, weighed down by renewed trade war fears following a political dispute between the US and Colombia. These concerns, coupled with the release of a powerful open-source AI model from China, rattled investor sentiment. However, the Dow later rebounded as hopes for Federal Reserve interest rate cuts gained traction.

The tech sector, particularly Nvidia, faced significant pressure. The emergence of DeepSeek-R1, a Chinese AI model, challenges the dominance of US-based tech companies in the AI chip market. This development raises questions about the effectiveness of US trade restrictions and casts doubt on the long-term prospects of companies like Nvidia.  

Despite the tech sector’s weakness, the Dow Jones managed to recover some of its early losses. The index remains bullish overall, having closed higher on eight of the last ten trading days. However, it is still below its record highs reached last November.