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The market narrative that gripped stocks ahead of today’s opening bell continued its hold throughout the trading session today. A general re-think on AI spending led the bearish sentiment, with China’s reported DeepSeek AI open-source module reportedly having been developed in two months and costing no more than $6 million, yet somehow providing the AI experience users have been looking for.

It will probably be a while before we get the full story, but tech stock investors erred on the side of caution today, sending the tech-heavy Nasdaq down -3%. NVIDIA (NVDA - Free Report), the high-end GPU provider which had been the prime driver in the AI trade for the past year, has shed -17% on this news — its worst trading day since 2020, and the biggest single-day drop in market capitalization ever — while energy-providing players in the AI space like Constellation Energy (CEG - Free Report) fell -20% on the day.

Meanwhile, the blue-chip Dow gained +289 points today, +0.65%. Stocks like AT&T (T - Free Report), after beating expectations on its earnings report ahead of today’s open, gained +6% for the session. Thus, much like the AI rally did not float all publicly traded boats, so this new re-think did not sink non-AI plays today. We’ve back to a bifurcated market, but something of a mirror-image to what we’ve experienced for much of the past two years.

New Home Sales Better than Expected
 

Earlier today, we saw December New Home Sales figures, which were higher than anticipated following upward revisions to the previous month. A total of 698K seasonally adjusted, annualized new homes were sold last month, up from the 671K expected, and above the upwardly revised 674K for November, which gained +10K in this morning’s revision.

We still see 494K new homes available on the market, equivalent to 8.5 months at the sales rate at present. The leader by region was the Northeast at +41.7%, followed by the West at +20.3%. The South and Midwest saw negative rates for the month: -2.1% and -3.3%, respectively.

What to Expect from the Stock Market Tuesday
 

Speaking of housing prices, tomorrow morning brings us new Case-Shiller home price data for November, expected to tick up 10 basis points (bps) to 4.3% on the 20-city survey. We’ll also see Durable Goods Orders for December and, after the open, a new Consumer Confidence Index for January — both expected to tick up from the previous month.

Ahead of tomorrow’s opening bell, we’ll hear from a wide array of stocks in terms of quarterly earnings, including Boeing (BA - Free Report), General Motors (GM - Free Report), Lockheed Martin (LMT - Free Report), JetBlue (JBLU - Free Report) and Royal Caribbean (RCL - Free Report). Once the regular trading day has closed on Tuesday, Starbucks (SBUX - Free Report) will provide Q1 earnings results. The big “Mag 7” players — including Microsoft (MSFT - Free Report) and Tesla (TSLA - Free Report) — won’t report until Wednesday.

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