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The S&P 500 futures are down 128 points and are trading 2.1% below fair value, the Nasdaq 100 futures are down 770 points and are trading 3.5% below fair value, and the Dow Jones Industrial Average futures are down 322 points and are trading 0.7% below fair value.

Contracts linked to the S&P 500 and Nasdaq 100 are sharply lower and futures tied to the Dow industrials are down ahead of the open.

A risk-off trade has taken root, and chipmakers are sinking, after China's DeepSeek R1 release was "on par" with OpenAI's ChatGPT and Bloomberg reported that the model could be more cost effective and run on chips that are less advanced.

NVIDIA (NVDA) is among the influential names impacted by the developments, trading 12% lower ahead of the open.

Treasury yields are noticeably lower and buying is picking up in other sovereign debt markets, reflecting some flight to safety as equities sink. The 10-yr yield is 11 basis points lower at 4.52%.

Earnings season picks up steam this week with Apple (AAPL), Microsoft (MSFT), Meta Platforms (META), Amazon.com (AMZN), and Tesla (TSLA) reporting results.

There is also an FOMC meeting to get through and the market expects the target range for the fed funds rate to remain unchanged at 4.25-4.50%.

Today's economic lineup features the December New Home Sales report at 10:00 ET.