11:58 AM EST, 01/27/2025 (MT Newswires) -- US equity indexes sank in midday trading Monday amid a sell-off in technology as an artificial intelligence program from a Chinese start-up, DeepSeek, raised questions about the use of computing power and the cost-effectiveness of rival platforms.

The Nasdaq Composite plunged 3.2% to 19,310.4, the S&P 500 down 1.9% to 5,984.5, and the Dow Jones Industrial Average slid 0.1% to 44,371.8. Technology and utilities were among the worst performers intraday, while healthcare and consumer staples led the gainers.

DeepSeek launched a free, open-source large-language model in late December, claiming it was developed in two months at a cost of under $6 million, according to a Wedbush Securities note Monday. Last week, DeepSeek launched a model that rivals OpenAI's ChatGPT and Meta's Llama 3.1 and was number 1 on Apple's App Store over the weekend.

"DeepSeek built the model using reduced capability chips from Nvidia ( NVDA ) which is impressive and thus has caused major 'agita' for US tech stocks with massive pressure on Nasdaq," analysts including Daniel Ives, global head of technology research at Wedbush, said in the note. "DeepSeek impressed the tech community with this LLM model...but this is not launching 100x the capacity/algorithms that is needed to even consider this a competitive threat."

Still, chipmakers dominated the worst performers among mega-caps. Nvidia ( NVDA ) fell more than 16% intraday, with Micron Technology ( MU ) down 10%, ASML Holdings (ASML) 6% lower, and Broadcom ( AVGO ) slumping over 16%.

Most US Treasury yields fell, with the benchmark 10-year retreating 8.1 basis points to 4.54%. The two-year rate dropped 5.8 basis points to 4.21%.

In economic news, US new-home sales accelerated to a 698,000 annual rate in December from an upwardly revised 674,000 rate in November, compared with the 672,000 rate expected in a survey compiled by Bloomberg. Home sales were up 6.7% from December 2023.

West Texas Intermediate crude oil futures dropped 2.4% to $72.84 a barrel.