Wall Street Closes Lower as Investors Await Nvidia's Earnings Report
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Wall Street ends down; investors brace for Nvidia report
U.S. stocks fell on Wednesday as investors awaited Nvidia's quarterly report, seen as a key event given the company's significant gains from the AI boom. Nvidia shares dipped, influencing other tech giants. Anticipation also surrounded the U.S. Federal Reserve's possible interest rate cut at its September meeting.U.S. stocks fell on Wednesday ahead of a quarterly report from Nvidia, Wall Street's centerpiece event of the week that could shatter or add fresh fuel to a rally driven by optimism around artificial intelligence. Shares of the dominant seller of AI processors, due to report after the closing bell, dipped 2.1%, trimming their gain so far this year to 154%. Following several blowout quarterly reports, Nvidia is viewed as the biggest winner so far from AI technology. Its latest results follow concerns about increases in already-hefty spending by Microsoft, Alphabet and other major players in the race to dominate emerging AI technology. "It's been the poster child for the AI boom and it's really led the charge, so it would be hard for the market to move on in spite of a disappointment from Nvidia," warned Keith Buchanan, senior portfolio manager at GLOBALT Investments in Atlanta. "Nobody has their arms around how long Nvidia can continue to surprise on the upside, but, naturally, it can't last forever," Buchanan added. Options pricing shows traders anticipate a move of around 9.8% in Nvidia's shares on Thursday, a day after it reports its results, data from analytics firm ORATS showed. Other chip stocks also dipped, with Broadcom and Advanced Micro Devices each losing more than 2%. Google-owner Alphabet, Microsoft and Amazon each lost about 1%. The S&P 500 declined 0.60% to end the session at 5,592.18 points. The Nasdaq declined 1.12% to 17,556.03 points, while the Dow Jones Industrial Average declined 0.39% to 41,091.42 points. Of the 11 S&P 500 sector indexes, eight declined, led lower by information technology, down 1.3%, followed by a 1.05% loss in consumer discretionary. Investors widely expect the U.S. Federal Reserve will lower interest rates at its September meeting after Fed Chair Jerome Powell's support for imminent policy adjustment last week sparked broad-based market gains. The CME Group's FedWatch Tool currently sees a 64% chance of a 25-basis point reduction and a 37% chance of a 50-bps cut. The Personal Consumption Expenditure report for July, due on Friday, may provide further insight into the central bank's likely rate-cut trajectory. Super Micro Computer tumbled 19% after the AI server maker said it would delay the filing of its annual report for the fiscal year ended June 30, a day after Hindenburg Research disclosed a short position in the company. The market value of billionaire Warren Buffett's Berkshire Hathaway surpassed $1 trillion for the first time. Its class B stock rose about 0.9%. Declining stocks outnumbered rising ones within the S&P 500 by a 1.3-to-one ratio. Volume on U.S. exchanges was relatively light, with 9.9 billion shares traded, compared to an average of 11.7 billion shares over the previous 20 sessions.
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Wall St. ends down; Nvidia reports, shares tumble
STORY: U.S. stocks fell on Wednesday ahead of a quarterly earnings report from AI darling Nvidia after the closing bell, Wall Street's centerpiece event of the week. The Dow shed four-tenths of a percent, the S&P 500 lost six-tenths and the Nasdaq dropped more than 1%. Nvidia forecast third-quarter revenue largely in line with Wall Street's estimates. But after several blowout quarters, Wednesday's report failed to impress, with Nvidia's stock, which closed down 2%, falling more than 5% in extended trading. Brad Conger, chief investment officer at Hirtle Callaghan, explained why investors, even before the report, were bracing for less-than-blockbuster guidance from the AI chip leader. "There is a marked slowdown in the year-over-year growth rate and the rate of surprises. So the guidance, the rate at which they have beaten guidance over the past five, six quarters, has stepped down. And so I think there might have been a recognition of... this might be the quarter where they just meet guidance, in which case the the expectations and the valuation are so high at Nvidia that it's very probable that meeting guidance means the stock sells off." Other chip stocks also dipped, with Broadcom and Advanced Micro Devices each losing ground. And fellow Magnificent 7 members Alphabet, Microsoft and Amazon dipped lower as well. But the biggest tech tumble by far came from Super Micro Computer, whose shares plunged 19% after the AI server maker said it would delay the filing of its annual report, a day after Hindenburg Research disclosed a short position in the company. In notable non-tech news, Warren Buffett's Berkshire Hathaway briefly passed $1 trillion in market value for the first time ever.
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Wall Street ended lower on Tuesday as investors braced for Nvidia's earnings report, which could significantly impact market sentiment. The anticipation surrounding the chipmaker's results reflects the growing influence of artificial intelligence on the tech sector and broader market trends.
Market Performance and Investor Sentiment
Wall Street closed lower on Tuesday as investors eagerly awaited Nvidia Corp's quarterly results, which were scheduled to be released after the closing bell. The S&P 500 index fell 0.6%, the Dow Jones Industrial Average dropped 0.2%, and the Nasdaq Composite declined 0.9% 1. This downturn reflected the cautious sentiment among investors, who were anticipating the potential impact of Nvidia's earnings report on the broader market.
Nvidia's Significance and Market Expectations
Nvidia, a leading chipmaker and a key player in the artificial intelligence (AI) sector, has become a bellwether for market sentiment. The company's shares have surged nearly 220% year-to-date, propelled by the growing demand for its chips used in AI applications 1. Analysts were expecting Nvidia to report strong quarterly results, with revenue potentially tripling compared to the previous year. However, there were concerns that even impressive results might not be enough to sustain the stock's remarkable rally.
Sector Performance and Notable Movements
The information technology sector was among the weakest performers in the S&P 500 index. Palo Alto Networks experienced a significant drop of 5.5% following its quarterly report, despite beating expectations 2. This decline highlighted the high expectations set for tech companies in the current market environment.
Broader Market Trends and Economic Factors
Investors were also processing mixed signals from retailers' earnings reports and their potential implications for consumer spending. Lowe's Cos raised its annual profit forecast, while Macy's maintained its full-year outlook 2. These developments provided insights into the state of consumer spending and the overall health of the retail sector.
Federal Reserve and Interest Rate Outlook
The market remained attentive to the Federal Reserve's stance on interest rates. Minutes from the latest Fed meeting were scheduled for release on Wednesday, potentially offering clues about the central bank's future policy decisions 1. This anticipation added another layer of uncertainty to the market's performance.
Looking Ahead: Nvidia's Impact and Market Direction
As investors awaited Nvidia's earnings report, there was a palpable sense of anticipation in the market. The company's results were expected to have a significant impact not only on its own stock but also on the broader tech sector and overall market sentiment. The outcome of this report could potentially set the tone for market performance in the coming days and weeks, underscoring the growing influence of AI-related companies on Wall Street.
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