JPMorgan Private Bank US Equity Strategist Abby Yoder joins Morning Brief to discuss market reactions (^DJI, ^IXIC, ^GSPC) coming off of Monday’s sell-off fueled by the release of DeepSeek’s new cost-effective AI chatbot.
Yoder reflects that while the S&P 500 (^GSPC) experienced minimal volatility in 2024, current market pressures from DeepSeek’s emergence were unexpected. “We couldn’t have guessed the reason why,” she says, adding, “We didn’t expect it to be this.” Nevertheless, she views the volatility as “healthy” for markets, noting it helps reset valuations and promotes broader market participation.
Despite current turbulence, Yoder maintains her bullish outlook, keeping her S&P 500 year-end price target at 6,400.
Regarding the AI sector impacts, Yoder points out that the sell-off has primarily affected Big Tech, while the other 493 companies in the S&P 500 continue to show strength.
“What’s happened essentially is we have AI that’s just as effective at a lower cost, so if I’m a company in any other industry and I’m thinking, ‘Okay, there was this barrier in terms of cost previously, and now that’s been lowered, and now I can implement not only more use cases but at a lower cost,’ I think that’s the read through,” she explains.
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