US stocks are back to where they were before DeepSeek

US big tech stocks are set to become the “Lagnificent 7” this year, Bank of America Corp.’s Michael Hartnett warned

Stocks are ending a wild week on a positive note after solid forecasts from tech heavyweights eased concern about the outlook for the industry that has powered the bull market.

A relative sense of calm prevailed just a few days after the market was hit by jitters that a cheap artificial intelligence-model from Chinese startup DeepSeek could make valuations of the booming technology tough to justify.

The S&P 500 wiped out its weekly losses and the Nasdaq 100 rose almost 1.5% as Apple Inc. gave a reassuring forecast. Meta Platforms Inc. was set for its longest winning run since 2015. Nvidia Corp.’s chief Jensen Huang was set to meet with President Donald Trump Friday.

With four of the Magnificent Seven’s earnings behind us, investors may be sighing with relief that neither DeepSeek angst nor serious signs of a slowdown in overall demand emerged. The implications for tech earnings are profound, with hundreds of billions of dollars in capital spending deployed but profits still largely elusive. The ramifications are also immense for a stock market that spent the better part of two years rallying almost solely on the promise of AI.

“After a period of clear trends since mid-January, markets experienced a turbulent week,’ said Florian Ielpo at Lombard Odier Asset Management. “The revelation on Monday that AI technology was not exclusively controlled by the U.S. triggered a temporary market rout, significantly impacting major companies within the S&P 500. Following this upheaval, global markets regained momentum.”

Wall Street also got a degree of solace after the Federal Reserve’s preferred inflation gauge came in line with estimates, though it still remained well above the central bank’s 2% target.

“While there’s still further progress to be made on inflation, investors can breathe a sigh of relief and refocus on the market’s more notable fundamentals, like earnings growth and the economy,” said Bret Kenwell at eToro.

The S&P 500 rose 0.7%. The Nasdaq 100 climbed 1.4%. The Dow Jones Industrial Average was little changed. A gauge of the “Magnificent Seven” megacaps rallied 2%. The Russell 2000 of small firms added 0.3%.

The yield on 10-year Treasuries was little changed at 4.51% The Bloomberg Dollar Spot Index rose 0.1%.

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.”