DeepSeek AI is reviving the most beaten-down part of the US stock market

DeepSeek AI is putting a deep dent in the US stock market, especially the chip companies who’ve been the beneficiaries of a big spending binge.

But the hit to the S&P 500 is also pushing Treasury yields lower as investors leave riskier assets for safer ones, perhaps also taking a bit of a dimmer view on economic growth should AI-adjacent business investment moderate. This drop in yields is a big boon for stocks tied to the real estate sector, which has gotten shellacked as long-term borrowing costs stayed high despite the Federal Reserve’s rate cuts. Mortgage rates tend to follow long-term bonds, and the 10-year Treasury yield hit its lowest level of the year today, just below 4.5%.

Mortgage lender Rocket Companies (disclosure: I own it) is on a tear, up more than 5%, while the iShares US Home Construction ETF is up nearly 2% as of 12:15 p.m. ET.

Call it a silver l-AI-ning: while this new chatbot has struck at the heart of the US stock market’s greatest strength, it may be reducing the US economy’s most obvious vulnerability at the same time.