On a noteworthy Tuesday in the stock market, the three major US indices, namely the Dow Jones, S&P 500, and Nasdaq, witnessed a significant uptickThe Dow Jones continues its ascent, inching ever closer to its peak levelsMeanwhile, after a sharp decline the previous Monday, both the S&P 500 and the Nasdaq showed signs of recovery, with the Nasdaq bouncing back off its upward trend line, positioning itself for a reboundCurrently, investors observe a prevailing sideways trend, but with the crucial support levels holding up, the risk of further corrections appears to be diminishing considerably.

In a particularly startling turn of events, the Philadelphia Semiconductor Index experienced a catastrophic drop of 9% on Monday, due to a wave of negative market sentiment, plunging right to critical support lines

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Tuesday saw a momentary recovery, as it managed to cling to its support, albeit with a feeble bounce that left investors feeling uncertain about its stabilityShould it breach current support, there is a looming final defense line which, if surpassed, could trigger a mid-term correction aheadAs it stands, the situation remains quite precarious, with risks still very much on the table.

Conversely, the Nasdaq Golden Dragon Index, which tracks Chinese stocks, recently discovered a halt in its downward trajectory, moving into a phase of consolidationOver the past few days, it observed a series of rebounds, surpassing resistance levels, and signaling possible bottoming outA breakthrough of the upcoming resistance could indicate a wider uptrend on the horizon.

Real estate and biotechnology sectors within the S&P have recently experienced a counteraction against their declining trends, with both indices breaking through their downward trajectory lines and showing indications of recovery

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They have oscillated upward in recent sessions, suggesting that a successful breach of the current resistance level could see an ongoing reversal toward uptrends.

In contrast, both gold and silver futures showed signs of recovery as well, with gold rebounding back to its high pointsHowever, in the past couple of days, they faced consolidation and have not yet fallen below the upward trend line established previouslySilver, on the other hand, struggles against a downward trend line amidst some oscillating declines, suggesting potential for short-term pullbacks, with next support not far off.

On the energy front, the oil futures and the broader energy sector have recently faced a downward correction after a short-term reboundOver the last few days, there has been a consistent downward trend, pushing oil back to its upward trend line, albeit signaling signs of slowdown

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The energy market is still under downward pressure, and with substantial distance from lower support levels, the downward risk remains considerable.

In the realm of technological advancements, a buzz around the new AI model developed by DeepSeek has sent ripples through the industry, sparking discussions regarding giants like Nvidia and the future trajectory of AI chip stocksOn Monday, news surrounding DeepSeek instigated massive sell-offs in Nvidia and other related AI chip stocks, although the latter clawed back some losses by TuesdayDeepSeek claimed it had created an AI model comparable to US competitors like OpenAI but utilized underperforming chips at a fraction of the cost.

The implications of DeepSeek's announcement have been described by the US government as a “wake-up call” for American tech firms

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OpenAI's CEO, Sam Altman, noted that DeepSeek's performance was impressive, indicating an exhilarating phase of competition emerging in the AI landscapeAs Wall Street analysts grappled with the news surrounding DeepSeek, AI chip stocks faced a dramatic fall on MondayThe mammoth question was whether this would induce major cloud computing providers to re-evaluate their hefty data center investments.

Deutsche Bank analyst Adrian Cox raised skepticism in a client report, suggesting that the approach driven by the “bigger is better” philosophy motivating the AI race may now be in question due to DeepSeek's innovationsCox illustrated his point by comparing it to driving a Tesla Model X merely to buy a pint of milk, asserting that Chinese rival BYD could serve the same purpose.

On Tuesday, Nvidia shares surged by 8.9% to close at $128.99, managing to recover from a monumental 17% drop experienced on Monday, which wiped out a staggering $560 billion in value in just one day.

Nvidia referred to DeepSeek’s advancements as “an impressive leap in AI”, yet cautioned that the methodologies employed by DeepSeek would still demand extensive Nvidia GPUs and high-performance networking capabilities

Several analysts concurred, indicating that while DeepSeek’s progress may pose challenges for OpenAI, Nvidia is not as severely impacted as some might thinkThe advancements across DeepSeek appear to be more algorithm and software-centric rather than dependent solely on chip technology.

Further, Robert Mel, president of Semiconductor Advisors, notes that while its progress might disadvantage OpenAI, it does not pose an immediate threat to Nvidia, as AI players probably won’t rush to cancel their orders with the latterHe expressed skepticism about a quick turnaround from current demand, yet acknowledged that AI firms might explore alternative algorithms, including those touted by DeepSeek.

JPMorgan’s Harlan Sur alluded to historical trends where innovations in technology, especially in computational efficiency, have catalyzed increased demand for semiconductors despite the perceived threats emerging from competitors such as DeepSeek

Sur consequently recommended “buy” ratings to several tech stocks including Nvidia.

Meanwhile, Wedbush Securities analyst Dan Ives likened DeepSeek to a low-cost disruptor within the AI realm, suggesting that fears surrounding its impact will diminish as clarity emerges around its model and resourcesHe drew parallels to Amazon's recovery from the competitive threat posed by the budget e-commerce company Temu.

Ives posited that the Monday sell-off in AI stocks, in reality, could present a golden buying opportunity for stocks like Nvidia, suggesting the rebound exhibited by other semiconductor firms including Astera Labs and Broadcom confirms that investors are willing to capitalize on the situation.

In a follow-up analysis, Morgan Stanley analyst Joseph Moore revised Nvidia’s price target from $166 to $152 but maintained a “buy” rating, reflecting cautious optimism amid fluctuations across the sectors