Market Minute: Volatility Returns to Start the Week

Over the past 24 hours, the market has witnessed what could be one of the shortest trade disputes in modern history. President Trump threatened severe tariffs and sanctions against Colombia following a disagreement over the return of Colombian migrants. Initially, Trump announced a 25% tariff on all goods from Colombia. However, Colombian President Gustavo Petro quickly reversed course and agreed to Trump's terms. Despite the brief duration of the dispute, coffee futures—a major export from Colombia—spiked 2.4% overnight before retreating. 

The bigger story this morning, however, lies with tech stocks. A Chinese company named DeepSeek has disrupted the artificial intelligence (A.I.) trade by announcing the development of an open-source large language model (LLM) that, according to third-party tests, rivals or surpasses OpenAI's and Meta's Llama offerings. What’s even more shocking is DeepSeek’s claim that they achieved this breakthrough with just $6 million in funding and less advanced chips than those used by major players in the industry. 

While the company’s claims of building an optimized model with lower compute power, reduced energy consumption, and a timeline of just two months remain difficult to verify, the implications are significant. If proven true, this development could revolutionize how A.I. models are developed, questioning the need for hyperscalers to invest heavily in datacenter expansions. It also raises concerns about the U.S.’s dominance in the field of artificial intelligence. 

This news has had a significant impact on the market. Nvidia (NVDA) shares are down over 11% in premarket trading, and Nasdaq-100 Futures (/NQ) dropped 5% overnight. Could this be an overreaction? Possibly. But the reemergence of market volatility comes during a week filled with economic data releases, a Federal Reserve meeting on Wednesday, and earnings reports from four of the "Magnificent 7" tech giants. 

From a technical perspective, the pullback may be healthy following last week’s strong performance. As the market gains more clarity on the DeepSeek disruption, investors are likely to adopt a more tactical approach to positioning.