DeepSeek Deep Sixes the Stock Market. How Far the S&P 500 Could Fall
Kanebridge News
    HOUSE MEDIAN ASKING PRICES AND WEEKLY CHANGE     Sydney $1,638,545 (+0.82%)       Melbourne $1,023,679 (+1.75%)       Brisbane $1,038,818 (+0.18%)       Adelaide $951,068 (+0.69%)       Perth $923,390 (-0.21%)       Hobart $759,192 (-0.42%)       Darwin $769,355 (-0.10%)       Canberra $964,485 (-0.83%)       National $1,074,245 (+0.50%)                UNIT MEDIAN ASKING PRICES AND WEEKLY CHANGE     Sydney $777,604 (+1.00%)       Melbourne $478,404 (+0.18%)       Brisbane $668,589 (+0.89%)       Adelaide $498,047 (-0.58%)       Perth $519,492 (+1.90%)       Hobart $528,197 (-0.03%)       Darwin $378,865 (-1.17%)       Canberra $494,950 (+0.08%)       National $567,655 (+0.60%)                HOUSES FOR SALE AND WEEKLY CHANGE     Sydney 11,855 (+190)       Melbourne 14,114 (-991)       Brisbane 8,271 (+242)       Adelaide 2,797 (+147)       Perth 7,549 (+147)       Hobart 1,213 (+7)       Darwin 181 (-4)       Canberra 1,228 (+25)       National 47,208 (-237)                UNITS FOR SALE AND WEEKLY CHANGE     Sydney 9,100 (+118)       Melbourne 6,842 (-31)       Brisbane 1,703 (+24)       Adelaide 418 (+32)       Perth 1,696 (+19)       Hobart 245 (+15)       Darwin 279 (+8)       Canberra 1,140 (-4)       National 21,423 (+181)                HOUSE MEDIAN ASKING RENTS AND WEEKLY CHANGE     Sydney $800 ($0)       Melbourne $590 ($0)       Brisbane $650 ($0)       Adelaide $620 ($0)       Perth $695 (-$5)       Hobart $555 (-$15)       Darwin $780 (+$20)       Canberra $700 ($0)       National $684 (+$1)                UNIT MEDIAN ASKING RENTS AND WEEKLY CHANGE     Sydney $750 ($0)       Melbourne $600 ($0)       Brisbane $650 (+$5)       Adelaide $525 (+$25)       Perth $650 ($0)       Hobart $480 (-$13)       Darwin $570 (+$5)       Canberra $570 (-$10)       National $610 (+$1)                HOUSES FOR RENT AND WEEKLY CHANGE     Sydney 6,415 (-92)       Melbourne 8,122 (-49)       Brisbane 4,023 (-50)       Adelaide 1,424 (-45)       Perth 2,128 (-99)       Hobart 232 (+21)       Darwin 103 (-17)       Canberra 559 (-41)       National 23,006 (-372)                UNITS FOR RENT AND WEEKLY CHANGE     Sydney 9,115 (-492)       Melbourne 6,656 (-238)       Brisbane 2,047 (-142)       Adelaide 349 (-56)       Perth 639 (-48)       Hobart 107 (+5)       Darwin 178 (-21)       Canberra 550 (-3)       National 19,641 (-995)                HOUSE ANNUAL GROSS YIELDS AND TREND         Sydney 2.54% (↓)       Melbourne 3.00% (↓)       Brisbane 3.25% (↓)       Adelaide 3.39% (↓)       Perth 3.91% (↓)       Hobart 3.80% (↓)     Darwin 5.27% (↑)      Canberra 3.77% (↑)        National 3.31% (↓)            UNIT ANNUAL GROSS YIELDS AND TREND         Sydney 5.02% (↓)       Melbourne 6.52% (↓)       Brisbane 5.06% (↓)     Adelaide 5.48% (↑)        Perth 6.51% (↓)       Hobart 4.73% (↓)     Darwin 7.82% (↑)        Canberra 5.99% (↓)       National 5.58% (↓)            HOUSE RENTAL VACANCY RATES AND TREND       Sydney 2.0% (↑)      Melbourne 1.9% (↑)      Brisbane 1.4% (↑)      Adelaide 1.3% (↑)      Perth 1.2% (↑)      Hobart 1.0% (↑)      Darwin 1.6% (↑)      Canberra 2.7% (↑)      National 1.7% (↑)             UNIT RENTAL VACANCY RATES AND TREND       Sydney 2.4% (↑)      Melbourne 3.8% (↑)      Brisbane 2.0% (↑)      Adelaide 1.1% (↑)      Perth 0.9% (↑)      Hobart 1.4% (↑)      Darwin 2.8% (↑)      Canberra 2.9% (↑)      National 2.2% (↑)             AVERAGE DAYS TO SELL HOUSES AND TREND         Sydney 29.5 (↓)       Melbourne 31.6 (↓)       Brisbane 31.5 (↓)       Adelaide 26.2 (↓)       Perth 41.1 (↓)       Hobart 33.2 (↓)       Darwin 24.8 (↓)       Canberra 32.7 (↓)       National 31.3 (↓)            AVERAGE DAYS TO SELL UNITS AND TREND         Sydney 25.4 (↓)       Melbourne 31.6 (↓)       Brisbane 27.4 (↓)       Adelaide 23.7 (↓)       Perth 41.0 (↓)       Hobart 26.8 (↓)       Darwin 45.2 (↓)       Canberra 43.3 (↓)       National 33.0 (↓)           
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DeepSeek Deep Sixes the Stock Market. How Far the S&P 500 Could Fall

By PAUL R. LA MONICA
Tue, Jan 28, 2025 12:12pmGrey Clock 3 min

DeepSeek just might derail the stock market’s rally.

The S&P 500 hasn’t had a correction , a 10% pullback from a high, since October 2023. Investors kept buying throughout 2024 despite angst surrounding the Federal Reserve and interest rates, not to mention numerous international concerns.

But now, worries about cheaper artificial intelligence models from the Chinese-developed app named DeepSeek may be the excuse that investors were waiting for to finally sell shares in earnest. Stocks plunged Monday .

The declines were biggest in ing tech companies, such as Nvidia , Broadcom and Microsoft . But other sectors, namely manufacturing and the utility or energy stocks that have big ties to the AI theme, were hit hard as well

The S&P 500 and Nasdaq Composite tumbled 1.5% and more than 3% respectively. The Dow Jones Industrial Average , which is less exposed to tech, gained nearly 300 points, or 0.7% .

The market is now closer to correction territory than it has been since August , when worries about a surge in the value of the Japanese yen versus the dollar spooked investors and led to a spike in volatility. But the major stock indexes still have a way to go before the declines from their peaks reach 10%.

The S&P 500 ended Monday at around 6012 , putting it just 2% below its record high. The blue-chip index would need to fall another 8% to just above 5500 to reach correction status. The Nasdaq is closer: It has fallen more than 4% from its peak and is 6% above the correction- territory level of 18,156.50.

But even before Monday’s DeepSeek bombshell, there were growing concerns that stocks may head into a correction. Barry Bannister, chief equity strategist at Stifel, recently reiterated a July call for the S&P 500 to fall 10% from its peak. He thinks it will drop to about 5500 later this year.

Bannister has been fairly bearish for the better part of a year. He said in a report Sunday that there is too much optimism about fiscal stimulus from President Donald Trump; the notion of American exceptionalism, or that stocks here have better prospects because the U.S. economy is more innovative and entrepreneurial; and hype about the Magnificent Seven of tech.

Bannister worries that core inflation and longer-term bond yields will remain higher for longer, creating a “a mild case of stagflation”—the dreaded combination of stagnant growth and persistent inflation. That may mean fewer Fed rate interest-rate cuts until the economy actually weakens, “which itself is not bullish,” Bannister wrote.

Trump’s threat of tariffs and stricter immigration policies, which would boost the cost of imported goods and potentially drive wages higher by curtailing the supply of labor, may also stoke fear of more persistent inflation.

So what should investors do now?

Bannister argues that “defensive value” stocks, such as healthcare and consumer staples companies, should outperform. Investors seem to agree: Both the Health Care Select Sector SPDR and the Consumer Staples Select Sector SPDR exchange-traded funds were up more than 2% as the broader market fell on Monday.

Bannister likes utilities too, but that sector is trickier. The group as a whole sank Monday, led lower by significant drops in Vistra and Constellation Energy , the two utilities that have gotten the biggest boost from AI’s demand for energy. But shares of classic, less exciting, regulated utilities, such as Duke Energy, Dominion Energy, and Xcel Energy , rallied. All three stocks have big dividend yields.

Dividend payers across all sectors could hold up better in a suddenly more volatile market. Simeon Hyman, global investment strategist with ProShares , told Barron’s that companies that pay dividends tend to be more stable. Companies may pull back on plans to buy back more stock or invest in their future if conditions change, but with rare exceptions “once you commit to dividend growth, you stick with it,” he said.

The SPDR S&P Dividend ETF and ProShares S&P 500 Dividend Aristocrats ETF , which recently added FactSet Research System , Erie Indemnity , and Eversource Energy to the fund, were both up nearly 2% Monday.

Still, even investors in dividend stocks need to be wary. There could be more downside ahead for the broader market. Simply put, stocks are arguably long overdue for a correction.

“The last time the market entered an official correction was 309 trading days ago, spanning well beyond the average number of 173 trading days without a correction since 1928,” Adam Turnquist, chief technical strategist for LPL Financial , said in a report last week.

There is a case to be made that there was too much optimism on the part of investors. Katie Stockton, founder and managing partner of Fairlead Strategies, noted that the Cboe Volatility Index, known as Wall Street’s fear gauge, recently fell to levels in the midteens from a three-month high of nearly 28 in mid-December. She thinks a VIX reading that low was reflecting complacency. The VIX surged to just under 20 Monday.

Stockton now thinks that Monday’s market pullback could lead to more downside for the next few weeks. She said investors should keep an eye on two key technical support levels for the S&P 500: the closing level of about 5783 that it traded at on Election Day, and if stocks dip below that, the 200-day moving average of 5608.

Remember, the level that would bring the market into correction territory is just above 5500, in flirting distance from the 200-day average.



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The bank posted unaudited cash earnings for the quarter of A$1.7 billion, down 2% on the average of its prior two quarters

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National Australia Bank said that higher credit impairments against business loans contributed to a small fall in its unaudited December quarter cash earnings.

NAB , which is Australia’s second-largest bank by market capitalization, on Wednesday posted unaudited cash earnings for its fiscal first quarter of 1.74 billion Australian dollars, equivalent to about US$1.11 billion.

That was down 2% on the average of its prior two fiscal quarters. NAB did not give a year-earlier comparison.

The lender said that revenue grew by 3% compared with the average of its prior two fiscal quarters. Underlying profit growth of 4% over the same period was offset by higher credit impairment charges and income tax expenses, it added.

NAB, which posted an unaudited quarterly statutory profit of A$1.70 billion, said the A$267 million credit impairment charge included A$152 million of individually assessed charges. Those were mainly against Australian businesses and unsecured retail portfolios, it said.

The individual charges were up by 54% compared with a year earlier. NAB said that it had not altered its economic assumptions and scenario weightings.

“The economic outlook is improving but cost of living and interest rate challenges persisted,” Chief Executive Andrew Irvine said. “While most customers are proving resilient, we have maintained prudent balance sheet settings.”

NAB said it had seen a small decline in net interest margin due to funding costs, lending competition and deposits, partially offset by the benefit of higher interest rates.

On Tuesday, the Reserve Bank of Australia cut the country’s cash rate for the first time since 2020 but warned against expecting subsequent near-term cuts.

NAB is still targeting full fiscal-year productivity savings of more than A$400 million, and for operating expenses to grow by less than 4.5%, Irvine said.

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This stylish family home combines a classic palette and finishes with a flexible floorplan

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Just 55 minutes from Sydney, make this your creative getaway located in the majestic Hawkesbury region.

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