The S&P 500 fell 0.5%. The Nasdaq 100 lost 0.1%. The Dow Jones Industrial Average slid 0.8%.

The Bloomberg Dollar Spot Index rose 0.4%. The yield on 10-year Treasuries advanced two basis points to 4.54%.

What’s interesting is in the 10 days since Trump’s initial tariff threat on Jan. 21, the S&P 500 Index is essentially flat while equity benchmarks in Europe, Canada and Mexico are all higher, and the Nasdaq Golden Dragon Index, which is comprised of companies that do business in China but trade in the US, has jumped more than 4%.

“The market has already priced in quite a lot on the US tariffs issue, but there’s always a risk that Trump will go beyond what’s expected,” Gilles Guibout, head of European equities at AXA IM, said in a phone interview.

US big tech stocks are set to become the “Lagnificent 7” this year, Bank of America Corp.’s Michael Hartnett warned — suggesting investors should buy cheap international stocks instead of chasing pricey US shares.

The strategist, who coined the popular “Magnificent Seven” term to refer to the handful of tech stocks that powered the S&P 500’s 70% rally since late-2022, said investors have become overexposed to US equities after they attracted record inflows in January.

“US exceptionalism now exceptionally expensive, exceptionally well-owned,” the strategist wrote. “‘Magnificent 7’ becomes ‘Lagnificent 7,’ supports broadening of US and global equity and credit markets.”

To Matt Maley at Miller Tabak + Co., this week’s developments have put at least somewhat of a lid on the earnings growth than can be expected on the AI phenomenon.

“It is our opinion that it’s not going to take very long before the stock market will need to adjust to the idea that although the AI phenomenon could/should continue to be a positive factor, it’s likely that it’s not going to be as powerful as the market has been pricing-in over the past six months,” Maley noted.

Slowing demand growth for artificial intelligence chips, coupled with the entry of DeepSeek, will dominate the narrative when Advanced Micro Devices Inc., Qualcomm Inc. and Arm Holdings Plc report results next week.

Alphabet Inc. will also face questions on how it will mitigate the costs of developing its AI tools in light of DeepSeek’s performance and lower cost. Still, strong demand for cloud services will buoy result for the Google owner and its Magnificent Seven counterpart Amazon.com Inc.

“DeepSeek remains a major theme,” said John Belton at Gabelli Funds. “It is clear that DeepSeek did achieve some exciting engineering breakthroughs which will help other AI labs build models more efficiently. But many headline figures associated with these breakthroughs are misleading. This is more evolutionary than revolutionary, and consistent with natural/normal tech progress where we’d expect compute efficiencies over time.”

DeepSeek’s emergence roiled markets earlier this week, but investors see limited scope for the Chinese artificial intelligence startup to dent the performance of the Magnificent Seven, the latest Bloomberg Markets Live Pulse survey showed.

Of the 260 respondents, 88% said the debut of the startup’s latest model — which wiped $784 billion from the S&P 500 on Monday — will have little to no impact on the shares of the US technology behemoths in coming weeks. Few are cutting their exposure to the S&P 500, an index dominated by the massive tech companies.

Retail traders poured $8.1 billion into US stocks in the week through Wednesday — the most in two years, according to an analysis by Emma Wu, JPMorgan’s global quantitative and derivatives strategist.

This week’s exchange-traded fund flows made up half of the imbalance at $4.6 billion while single stocks accounted for slightly less than half of the retail imbalance at $3.5 billion.

“We expect the greater efficiency from new, lower-cost algorithms to lead to increased economic productivity, which is supportive of the broader equity market,” said Solita Marcelli at UBS Global Wealth Management. “In addition to these potential productivity gains, we believe the combination of solid US economic activity, healthy earnings growth, lower borrowing costs, and the potential for greater capital market activity will lead stocks higher over the balance of 2025.”

The firm sees the S&P 500 reaching 6,600 by the end of the year.

Corporate Highlights:

• Apple Inc. gave a reassuring revenue forecast for the current quarter, helping boost shares of the world’s most valuable company after its holiday results showed jarring declines for China and the iPhone.

• Intel Corp. issued a revenue forecast for the current period that fell short of analysts’ expectations.

• Exxon Mobil Corp. beat earnings estimates as strong production growth cushioned the drop in oil prices and refining margins, easing investor concerns about an increase in capital spending.

• Chevron Corp. raised dividends by 5% even as profit underperformed expectations amid shrinking crude prices and fuel-making margins.

• Walgreens Boots Alliance Inc. suspended the quarterly dividend it’s paid for the past 92 years in a bid to conserve cash and revive the business.

• AstraZeneca Plc abandoned plans to invest £450 million ($558 million) in a UK vaccine manufacturing plant, following protracted wrangling with the new Labour government over the level of state funding for the site.

Some of the main moves in markets:

Stocks

• The S&P 500 fell 0.5% as of 4 p.m. New York time

• The Nasdaq 100 fell 0.1%

• The Dow Jones Industrial Average fell 0.8%

• The MSCI World Index fell 0.5%

• Bloomberg Magnificent 7 Total Return Index rose 0.1%

• The Russell 2000 Index fell 0.9%

Currencies

• The Bloomberg Dollar Spot Index rose 0.4%

• The euro fell 0.3% to $1.0357

• The British pound fell 0.2% to $1.2391

• The Japanese yen fell 0.5% to 155.09 per dollar

Cryptocurrencies

• Bitcoin fell 3.2% to $101,648.54

• Ether rose 1.7% to $3,299.4

Bonds

• The yield on 10-year Treasuries advanced two basis points to 4.54%

• Germany’s 10-year yield declined six basis points to 2.46%

• Britain’s 10-year yield declined two basis points to 4.54%

Commodities

• West Texas Intermediate crude rose 1% to $73.43 a barrel

• Spot gold rose 0.2% to $2,800.98 an ounce

This story was produced with the assistance of Bloomberg Automation.

–With assistance from Phil Kuntz, Martin Keohan, Margaryta Kirakosian, Sujata Rao and Chiranjivi Chakraborty.

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