Technology is selling but AI is not going anywhere for now

This report is from today’s CNBC Daily Open, our international markets newsletter. CNBC Daily Open brings investors up to speed on everything they need to know, no matter where they are. Like what you see? You can subscribe here.

Technology drags down Nasdaq
American markets were on mixed Monday. U S&P 500 and Dow Jones Industrial Average rose, but the Nasdaq Composite it fell amid a massive technology selloff. The pan-European Stoxx 600 Index fell 0.55%, with most sectors in negative territory. Borrowing costs in the UK rose on Monday, raising concerns public spending cuts or tax increases.

Potential new US Steel bid
Cleveland Cliffs it is partnership with the rival Never in a potential offer in order US Steelthat its taken from Japan Nippon Steel was blocked by the White House earlier this month, sources told CNBC’s David Faber. The offer would be in the high $30s. Nippon had planned to buy US Steel for $55 a share in a deal valued at more than $14 billion.

Slow down inflation in India
India’s annual consumer price inflation in December is up 5.22%, according to the Ministry of Statistics and Program Implementation. The reading was lower than the 5.30% forecast by a Reuters poll of analysts, and the second month in a row that price growth has fallen. The softer inflation reading offers room for the RBI to cut rates, amid slowing growth in the country.

Second blow to quantum stocks
Quantum computing stocks went on sale on Monday later Meta Platforms CEO Mark Zuckerberg said in a Friday podcast by Joe Rogan that the technology is “pretty far from being a very useful paradigm.” Comments reinforce recent comments from Nvidia CEO Jensen Huang who suggested that computers are likely 15 to 30 years apart.

(PRO) Rieder buys 100% of the Nasdaq
The Nasdaq Composite underperformed other major indexes on Monday as investors rotated out of technology names. BlackRock Rick Rieder, who is the company’s chief investment officer of global fixed income, told CNBC that he “one hundred percent” buys the Nasdaq dip. Rieder explains his decision and how to implement downside protection.

The Nasdaq Composite lost 0.38%. Big tech names popular with investors largely fell in the session on Monday. Palantir – him higher yielding stock in the S&P last year – slid 3.4%, while Nvidia lost 2%, building on its losses from last week. Nvidia fell nearly 6% during the period, while Palantir lost more than 15%.

“This is a necessary part of a correction phase in our goal and we are probably further along in this correction than many investors recognize since many stocks went up in late November, early December,” said the CEO of AXS Investments, Greg Bassuk, adding that Friday’s employment report “consolidated” these concerns.

However, the S&P 500 rose 0.16% and the Dow Jones Industrial Average climbed 0.86% as investors rotated into non-tech stocks such as Amgen, Caterpillar and United Health.

It does not mean that these sectors will take the mantle of market leader anytime – or at all. Sector rotation is a common phenomenon in the markets, as investors secure their returns and look for the next stocks with upside potential. And the backdrop of rising rates it puts more pressure on growth-oriented tech stocks than value stocks, which typically make up the Dow.

Also, the artificial intelligence frenzy is not over, judging by the latest gain reports from TSMC and Foxconn, which trades as Hon Hai Precision Industry. Both companies saw their revenue increase on high demand for AI products.

A long-term rotation away from technology and AI is not likely. But one in the field cannot be dismissed.

— CNBC’s Samantha Subin, Hakyung Kim and Brian Evans contributed to this report.