The S&P 500 and Nasdaq sank at midday, dragged down by tech shares after Chinese artificial intelligence (AI) startup DeepSeek announced it had developed an AI large language model (LLM) at a much lower cost. The Nasdaq plunged 3%, and the S&P 500 slid 2%. The Dow Jones Industrial Average was down slightly.

Shares of AI chipmakers were especially hard hit, with Nvidia (NVDA), Broadcom (AVGO), and Micron Technology (MU) shares tumbling.

Also hammered were power providers, such as Vistra (VST) and Constellation Energy (CEG), which have been benefiting from expected demand for electricity to run AI data centers.

Shares of Microsoft (MSFT) and Alphabet (GOOGL) also dropped as they are among the companies pouring huge sums of money into their AI businesses. 

Apple (AAPL) shares advanced as soaring demand sent DeepSeek to the top of the company's App Store.

AT&T (T) was the best-performing stock in the S&P 500 after the telcom giant posted better-than-expected results as it grew its subscriber base.

Shares of Akero Therapeutics (AKRO) skyrocketed 100% when the pharmaceutical firm that focuses on metabolic illnesses said a Phase 2b study of its experimental treatment for liver disease showed positive results.

Oil and gold futures slumped. The yield on the 10-year Treasury note dipped as the DeepSeek news sent investors to the safety of bonds. The U.S. dollar fell against the yen and was little changed against the pound and euro. Major cryptocurrencies sank, with bitcoin off 5% to trade below $100,000.