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NEW YORK (AP) 鈥� Wall Street鈥檚 superstars tumbled Monday as a competitor from China threatens to upend the frenzy they鈥檝e been on.

The S&P 500 dropped 1.5%, dragged down in large part by a 16.9% fall for . Other Big Tech stocks also took heavy losses, and they pulled the Nasdaq composite down 3.1% for its worst loss in more than a month.

The damage was focused on AI-related stocks, while the rest of the market held up much better. The Dow Jones Industrial Average rose 289 points, or 0.7%, and the majority of U.S. stocks climbed. But anyone holding an S&P 500 index fund, which are found in many 401(k) accounts, felt the pain because of how influential those tech giants have become on indexes.

The shock to financial markets came from China, where a company called unveiled a large language model that can compete with U.S. giants but at potentially a fraction of the cost. DeepSeek had already hit the top of the chart for free apps on Apple鈥檚 App Store by Monday morning, and analysts said such a feat would be particularly impressive given how the U.S. government has to top AI chips.

Skepticism, though, remains about how much DeepSeek鈥檚 announcement will ultimately shake the economy that鈥檚 built around the AI industry, from the chip makers making semiconductors to the utilities hoping to electrify gobbling up computing power.

鈥淚t remains to be seen if DeepSeek found a way to work around these chip restrictions rules and what chips they ultimately used as there will be many skeptics around this issue given the information is coming from China,鈥� according to Dan Ives, an analyst with Wedbush Securities.

DeepSeek鈥檚 disruption nevertheless rocked AI-related stocks worldwide.

In Amsterdam, Dutch chipmaking equipment company ASML slid 7%. In Tokyo, Japan鈥檚 Softbank Group Corp. lost 8.3% to pull closer to where it was before leaping on an announcement that it was joining a to invest up to $500 billion in AI infrastructure.

And on Wall Street, Constellation Energy lost more than a fifth of its value, 20.8%. The the shuttered to supply power for data centers for Microsoft.

All the worries sent investors toward bonds, which can be safer investments than any stock. The rush pushed the yield of the 10-year Treasury down to 4.52% from 4.62% late Friday.

It鈥檚 a sharp turnaround for the AI winners, which had soared in recent years on hopes that all the investment pouring in would remake the global economy and deliver gargantuan profits along the way. Such stellar performances also raised criticism that their stock prices had gone too far, too fast.

Before Monday鈥檚 drop, which was its worst since the 2020 COVID crash, stock had soared from less than $20 to more than $140 in less than two years, for example.

It was just on Friday that Meta Platforms CEO Mark Zuckerberg was saying he expects his company to invest up to $65 billion this year and grow its AI teams significantly, while talking up a data center in Louisiana that will be so large it could cover a significant part of Manhattan.

A small group of seven such companies has become so dominant that they alone accounted for more than half the S&P 500鈥檚 total return last year, according to S&P Dow Jones Indices. They include Alphabet, Amazon, Apple, Meta Platforms, Microsoft, Nvidia and Tesla.

Their immense sizes give them huge sway over the S&P 500 and other indexes that give more weight to bigger companies. That鈥檚 why many 401(k) holders felt the pain of 狈惫颈诲颈补鈥檚 drop, even if they didn鈥檛 know they owned any Nvidia, so long as they owned a fund that tracks the S&P 500.

All told, the S&P 500 fell 88.96 points to 6,012.28. The Nasdaq composite dropped 612.47 to 19,341.83, and the Dow Jones Industrial Average rose 289.33 to 44,713.58.

Brian Jacobsen, chief economist at Annex Wealth Management, suggested not overreacting to Monday鈥檚 sharp swings.

鈥淚t is possible that the news out of China could be overstated and then we could see a reversal of the recent market moves,鈥� Jacobsen said. 鈥淚t is also possible that the news is true, but then that would present new investment opportunities.鈥�

More big swings may be ahead. Apple, Meta Platforms, Microsoft and Tesla are all on the schedule this upcoming week to report how much profit they made at the end of 2024.

The pressure is on companies to keep delivering strong profits, particularly after a . When bonds are paying more in interest, they put downward pressure on stock prices. Yields have been on the rise amid a solid U.S. economy and worries about possibly higher inflation coming from and other policies favored by President Donald Trump.

So far, big U.S. companies have been reporting better results than analysts expected. AT&T became the latest on Monday, and its stock rose 6.3%.

In stock markets abroad, movements for broad indexes across Europe and Asia weren鈥檛 as forceful as for the big U.S. tech stocks. Stocks edged 0.1% lower in Shanghai after a showed export orders in China dropping to a five-month low.

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AP Business Writers Matt Ott and Elaine Kurtenbach contributed.

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This story has been corrected. Meta is planning to build a data center in Louisiana, not Manhattan.

Stan Choe, The Associated Press