The difference between Chinese and U.S. stocks is only getting clearer. The S & P 500 fell into correction on Thursday for the first time since 2023 . Meanwhile, the MSCI China index has surged double digits in its best start to a year in history, largely thanks to artificial intelligence, according to Goldman Sachs. Driving Chinese market gains are what Bank of America’s Michael Hartnett calls the “Fab Four” — Baidu , Alibaba , Tencent and Xiaomi . The tech companies’ stocks are all traded in Hong Kong; Baidu and Alibaba also have U.S.-listed shares. Invoking the popularity of The Beatles reflects the momentum with which the Chinese tech giants have risen on AI hopes. Alibaba and Tencent have in recent weeks both released AI models they claim rival those from DeepSeek and OpenAI, while the Chinese tech giants each have massive user bases given their respective dominance in the country’s e-commerce and social media industries. Alibaba on Thursday unveiled an updated version of its 200 million-user Quark browser with faster AI-generated results. Baidu has built its own AI model called Ernie that it’s been rolling out across its cloud storage and content generation apps. The company also develops autonomous driving and operates robotaxis across China. Xiaomi has downplayed its AI capabilities, instead focusing on its popular SU7 electric car , a swath of smartphones and internet-connected home appliances. The stock is on pace for its ninth-straight month of gains. It’s a “Year of International – long China & EU,” Hartnett said, saying the U.S.’s ” Magnificent 7 ” is now the “Lagnificent 7.” The CNBC Magnificent 7 Index — which includes Alphabet , Amazon , Apple , Meta Platforms , Microsoft , Nvidia and Tesla — is down about 12% year to date as of Friday. Even as of March 6, the DeepSeek news had triggered $3 trillion in market cap losses for the Magnificent 7, while doubling the market cap of the Fab Four to $1.6 trillion, according to Bank of America. Since Chinese startup DeepSeek’s AI breakthrough hit markets in late January, Beijing has ramped up its supportive signals on Chinese tech, while investors have become more interested in AI announcements from Alibaba and other Chinese companies. Initial Chinese stock gains have already started to fuel expectations that the local market will see its own version of the AI-driven rally that the U.S. saw in the last two years. “In the U.S., the AI rally rotated from AI infrastructure to AI enablers and then AI adopters. It’s a similar pattern in China,” HSBC analysts said earlier this month. They noted a “large valuation gap” between Chinese AI plays versus their U.S. peers, which could narrow as growth and profits pick up. Investors inside and outside China are getting more interested. Hong Kong stocks, particularly Alibaba and Tencent, saw net buys from mainland Chinese investors reach a record high on Monday . For international institutions, short-term hedge funds led most of the buying in February, while interest from longer-term investors has started to emerge this month, Robin Xing, chief China economist at Morgan Stanley, told reporters Wednesday in Beijing. “As concerns about the U.S. economy and U.S. markets [grow], their interest may increase,” he said in Mandarin, translated by CNBC. But he cautioned it’s not a given, and said research indicates U.S. consumers may not feel much impact until a 20% drop in stocks. — CNBC’s Michael Bloom contributed to this report.
The market sell-off is not over yet as consumer and corporate confidence take a dive on tariff uncertainty, according to Deutsche Bank. “We see the selloff in US equities as having further to go,” Binky Chadha, chief strategist at Deutsche Bank, wrote Saturday. “With trade policy uncertainty likely to continue to weigh, at least until April 2, we expect positioning to continue to unwind.” “A move to the bottom of the positioning band which is where it went to in the last trade war, would take the S & P 500 down to 5250,” Chadha added. The S & P 500 level highlighted by Chadha points to another 6.9% decline from Friday’s close of 5,638.94. The benchmark was last about 8% below the all-time high it reached just last month. .SPX YTD bar S & P 500 At the center of the strategist’s call are concerns of an economic slowdown amid tariff uncertainty that are unlikely to abate for at least the next several weeks. The latest earnings season showed CEOs are slashing capital expenditures and cutting their earnings forecasts. Chadha also expects the idea of a “Trump put” — in which the president will ease on his policies that have destabilized the market — will not be realized until a marked turn lower in Trump’s approval ratings. “Compared to the level of consumer confidence, the current approval rating is high, implying plenty of room for downside with negative growth or inflation developments likely to speed the catch down,” Chadha wrote. “We expect the net approval rating has to turn more significantly negative, at least -5%, before the administration starts to consider responding.” Still, Chadha — who held one of the more bullish outlooks heading into 2025 — said that it’s “too early to throw in the towel” on his year-end target of 7,000, a move that’s more than 24% higher from Friday’s close. He thinks stocks can bounce back sharply in the latter part of the year if there’s a resolution on tariff uncertainty. On Monday, at least, the broad index rose slightly as it tries to claw back its recent losses. The move came after the latest U.S. retail sales report showed consumers are still spending though at a slower pace than expected. “While the risks have grown, for now we maintain our year-end S & P 500 target of 7000,” he said.
Traders work on the floor of the New York Stock Exchange during morning trading on March 14, 2025 in New York City.
Michael M. Santiago | Getty Images
The market sell-off is not over yet as consumer and corporate confidence take a dive on tariff uncertainty, according to Deutsche Bank.
“We see the selloff in US equities as having further to go,” Binky Chadha, chief strategist at Deutsche Bank, wrote Saturday. “With trade policy uncertainty likely to continue to weigh, at least until April 2, we expect positioning to continue to unwind.”
“A move to the bottom of the positioning band which is where it went to in the last trade war, would take the S&P 500 down to 5250,” Chadha added.
The S&P 500 level highlighted by Chadha points to another 6.9% decline from Friday’s close of 5,638.94. The benchmark was last about 8% below the all-time high it reached just last month.
S&P 500
At the center of the strategist’s call are concerns of an economic slowdown amid tariff uncertainty that are unlikely to abate for at least the next several weeks. The latest earnings season showed CEOs are slashing capital expenditures and cutting their earnings forecasts.
Chadha also expects the idea of a “Trump put” — in which the president will ease on his policies that have destabilized the market — will not be realized until a marked turn lower in Trump’s approval ratings.
“Compared to the level of consumer confidence, the current approval rating is high, implying plenty of room for downside with negative growth or inflation developments likely to speed the catch down,” Chadha wrote. “We expect the net approval rating has to turn more significantly negative, at least -5%, before the administration starts to consider responding.”
Still, Chadha — who held one of the more bullish outlooks heading into 2025 — said that it’s “too early to throw in the towel” on his year-end target of 7,000, a move that’s more than 24% higher from Friday’s close. He thinks stocks can bounce back sharply in the latter part of the year if there’s a resolution on tariff uncertainty.
On Monday, at least, the broad index rose slightly as it tries to claw back its recent losses. The move came after the latest U.S. retail sales report showed consumers are still spending though at a slower pace than expected.
“While the risks have grown, for now we maintain our year-end S&P 500 target of 7000,” he said.
Warren Buffett speaks during the Berkshire Hathaway Annual Shareholders Meeting in Omaha, Nebraska, on May 4, 2024.
CNBC
Warren Buffett’s love for Japanese stocks grows fonder even as he increasingly sells U.S. equities.
The 94-year-old investor’s Berkshire Hathaway holding company raised its holdings in five Japanese trading houses — Itochu, Marubeni, Mitsubishi, Mitsui and Sumitomo — by more than 1 percentage point each, to stakes ranging from 8.5% to 9.8%, according to a regulatory filing.
The “Oracle of Omaha” said in his 2024 annual letter that Berkshire is committed to its Japanese investments for the long term and has reached an agreement with the companies to go beyond an initial 10% ceiling.
All five are the biggest “sogo shosha,” or trading houses, in Japan that invest across diverse sectors domestically and abroad — “in a manner somewhat similar to Berkshire itself,” Buffett said. Berkshire first bought into the companies in the summer of 2019.
Part of the investment strategy involves Buffett hedging currency risk by selling Japanese debt and then pocketing the difference between dividends from the investments and the bond coupon payments he has to make to service the debt.
At the end of 2024, the market value of Berkshire’s Japanese holdings came to $23.5 billion, at an aggregate cost of $13.8 billion. The investor praised the companies’ managements, relationships with their investors and their capital deployment strategies.
Buffett first unveiled the Japanese positionsd on his 90th birthday in August 2020 after making regular purchases on the Tokyo Stock Exchange, saying he was “confounded” by the opportunity and was attracted to the trading houses’ dividend growth.
In 2023, Buffett even paid a visit to Japan with his designated successor Greg Abel and met with the heads of the Japanese firms. He said he’d like Berkshire to own the companies forever.
The student of famed investor Benjamin Graham has been aggressively selling U.S. stocks and growing his record cash pile to $334 billion. Berkshire sold more than $134 billion worth of stocks in 2024, largely by shrinking the size of Berkshire’s two largest equity holdings — Apple and Bank of America.
Check out the companies making headlines before the bell. Norwegian Cruise Line — Shares of the cruise operator rose 4% on the back of an upgrade from JPMorgan to overweight from neutral. The firm is bullish on the company, citing that its management has indicated no change in booking curves and cancellation rates, or cracks in onboard spend levels. Incyte — The pharmaceutical stock fell more than 14% after the release of phase three trial data for a skin condition treatment. Incyte said that the trials of its drug met the primary endpoints. However, the drug was effective for less than half of the participants who took it in the trials. Netflix — The streaming giant advanced 1.5% on the back of MoffettNathanson’s upgrade to buy from neutral. The firm said Netflix can monetize more than previously expected, in turn growing profit. Affirm — The buy now, pay later stock dipped 13% after CNBC reported that rival Klarna will be the exclusive provider of such loans for Walmart . This takes away a coveted partnership from Affirm, whose chief revenue officer Wayne Pommen referred to Walmart and partnerships with big merchants such as Amazon and Target as its “crown jewel partnerships.” Nvidia — Shares of Nvidia edged 1.5% higher as investors picked up shares of the chipmaking giant, which has tumbled more than 12% over the past month. Sprouts Farmers Market — The food retailer added 1% on the back of an upgrade at Deutsche Bank to buy from hold. The bank said the stock’s recent 23% pullback has provided a good entry point. It believes Sprouts’ same-store sales momentum is sustainable and sees margin expansion opportunities. Berkshire Hathaway — Warren Buffett’s Berkshire Hathaway dipped just 0.1% after it upped its stake in Japanese trading houses Mitsubishi , Itochu , Sumitomo , Marubeni and Mitsui , according to regulatory filings. — CNBC’s Jesse Pound, Lisa Han, Michelle Theobald, Alex Harring contributed reporting.