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US stocks were able to erase previous losses ahead of Nvidia Corp.’s quarterly numbers, as investors eagerly awaited the firm’s ability to match the high expectations surrounding artificial-intelligence technology.
Nvidia has been the poster child of AI enthusiasm, making semiconductor chips that power generative AI and demand for those chips has gone through the roof. The chipmaker is still the best performer in the US equity benchmark this year, up about 35%.
Traders also kept an eye on the latest Federal Reserve minutes, which showed officials are in no rush to cut rates. Fed Governor Michelle Bowman argued that the current economic environment doesn’t warrant the central bank cutting rates, while Fed’s Thomas Barkin said recent data highlighted how price pressures in some sectors are still too high, despite improvement in the overall inflation picture.
The recent pickup in consumer and producer prices has cast a shadow over the economic enthusiasm that powered equity markets in recent months. While Nvidia is high quality, the AI hype has gone beyond the reasonable price stage. A host of similarities between tech stocks now and previous bubbles suggest the “Magnificent Seven” is only nearing levels that may lead it to pop.
Nvidia has acted as a “sentiment gauge” in the market, and its stock rally could either confirm or potentially put a ding in the lofty AI expectations. However, many times it’s not so much about the results — but it’s about the market’s reaction to them.
Nvidia loomed large over the market Wednesday ahead its earnings results.
Shares of the chip maker finished down nearly 3%, after falling about 4% Tuesday. The tech-heavy Nasdaq ended lower for a third straight session. Read the day’s full markets roundup here.
After the market closed, Nvidia reported quarterly sales that tripled from a year ago and beat Wall Street expectations. Its shares jumped in post-market trading.
Meanwhile, minutes released from the last Federal Reserve policy meeting reflected concerns from most officials about cutting interest rates too soon.
Other Key Developments on Wednesday:
Stocks ended mixed. The S&P 500 and Dow rallied late in the session to eke out gains, while the Nasdaq fell 0.3%. All three are still up for the month and year.
Amazon shares edged higher, Walgreens fell. Amazon is set to join the 30-stock Dow industrials index before trading begins Monday, replacing Walgreens.
Palo Alto Networks shares dropped 28% after reporting earnings.
Treasury yields inched up, with the yield on the 10-year note settling at 4.323%.
