HONG KONG (AP) — Asian stocks advanced Wednesday in thin Lunar New Year trading following a rebound on Wall Street driven by tech stocks as the panic over Chinese AI company DeepSeek faded.

Most markets in Asia were closed for holidays. Investors were focusing on the Federal Reserve’s rate decision due later in the day. U.S. futures were flat and oil prices fell.

In Tokyo, the Nikkei 225 index recovered from Tuesday's losses, gaining 0.7% to 39,273.49.

Australia’s S&P/ASX 200 rose 0.7% to 8,455.70 after data from the Australian Bureau of Statistics showed the Consumer Price Index increased by 0.2% in the December 2024 quarter, marking the smallest rise since the June 2020 quarter, when inflation declined during the COVID-19 outbreak.

India's Sensex was up 0.5%, while the SET in Bangkok shed 0.2%.

On Tuesday, tech stocks bounced back after tumbling Monday on doubts over whether the artificial-intelligence frenzy really needs all the dollars being poured into it.

The S&P 500 climbed 0.9% to 6,067.70, clawing back more than half of its earlier drop. The Dow Jones Industrial Average added 0.3% to 44,850.35, and the Nasdaq composite rallied 2% to 19,733.59 after sliding 3.1 % the day before.

The spotlight remained on Nvidia, whose chips are powering much of the move into AI and whose stock has become a symbol of the surrounding frenzy. It rose 8.8% after plunging nearly 17% on Monday, which was its worst drop since the 2020 COVID crash.

Other AI-related companies also held steadier, including chip company Broadcom, which rose 2.6%. Constellation Energy picked up 1.4% after plummeting nearly 21% on Monday. It had earlier rallied on expectations it will help supply the electricity that vast AI data centers would gobble up.

Such revenues are threatened after DeepSeek, a Chinese company, said it was able to develop a large language model that can perform as well as big U.S. rivals but at a fraction of the cost. That raises questions about whether all the spending expected for AI chips and electricity will need to happen.

AI-related stocks have been Wall Street’s biggest stars in recent years, soaring on expectations that big spending will only continue to grow. The gains, though, also created criticism that the stock prices had simply gone too high, too fast.

It’s still uncertain how much DeepSeek’s development will upend the AI industry. While it could mean less growth in spending than expected for data centers, electricity and chips, it could also boost other areas.

“If AI becomes less expensive to use, we think businesses will adopt it more quickly, making a greater investment in AI software,” according to James Egelhof, chief U.S. economist at BNP Paribas. “We think this acceleration in adoption could mean a rise in software investment that offsets – or even dwarfs – any deceleration in spending on data center structures, hardware and related investment.”

Some of Wall Street’s most influential companies, including Apple, Meta Platforms, Microsoft and Tesla, will release profit reports later this week.

A report showing confidence among U.S. consumers wasn’t as strong as economists expected made relatively small waves in the bond market. The more anticipated event will come on Wednesday, when the Federal Reserve will announce its latest decision on interest rates.

The widespread expectation is that it will leave the federal funds rate alone. If that proves true, it would be the first meeting where the Fed did not cut rates to give the economy a boost since it began doing so in September.

In other dealings Wednesday, benchmark U.S. crude shed 14 cents to $73.63 a barrel. Brent crude, the international standard, lost 18 cents to $76.31 a barrel.

In currency trading, the U.S. dollar fell to 155.09 Japanese yen from 155.53 yen. The euro cost $1.0438, down from $1.0432.

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AP Business Writer Stan Choe contributed.