Falls on Wall Street: US stock markets fell on Wednesday as investors prepared for Nvidia’s quarterly earnings report, a key event that could boost or hinder the ongoing rally driven by optimism around artificial intelligence (AI). Nvidia, a leading provider of AI processors, saw its shares fall 2 percent during the trading session, paring its year-to-date gain to 154 percent. The company’s results are highly anticipated after several strong quarterly results, positioning Nvidia as a major benefactor of AI advancements.
Concerns about spending in the AI sector
The upcoming report also comes amid concerns about increased spending by tech giants like Microsoft, Alphabet and others in the competitive AI sector. “Nvidia has been at the forefront of the AI boom, making it a critical market driver. A disappointing report from Nvidia could significantly impact market sentiment,” said Keith Buchanan, senior portfolio manager at GLOBALT Investments. Buchanan also added, “The market is unsure how long Nvidia can continue to deliver strong results, but it is clear that this trend cannot continue indefinitely.” Options data suggests that traders expect Nvidia’s stock price to fluctuate around 9.8 percent following its report, according to ORATS. Chip stocks also saw declines, with Broadcom and Advanced Micro Devices each falling about 2 percent, and the Philadelphia Semiconductor Index down 1.8 percent. Shares of major technology companies such as Alphabet, Microsoft and Amazon fell 1% or more. The S&P 500 fell 0.80% to 5,580.73 points, while the Nasdaq dropped 1.30% to 17,524.21 points. The Dow Jones Industrial Average fell 0.64% to 40,985.79 points. Of the 11 sector indexes in the S&P 500, eight experienced declines, with the information technology sector leading the decline at 1.23%, followed by the consumer discretionary sector with a loss of 1.14%.
Fed rate cut hopes
Investors are anticipating a possible interest rate cut by the U.S. Federal Reserve in September, boosted by comments from Fed Chair Jerome Powell in support of policy adjustments. CME Group’s FedWatch tool indicates a 64 percent chance of a 25 basis point reduction and a 37 percent chance of a 50 basis point cut. The upcoming Personal Consumption Expenditures report for July, due out on Friday, may offer additional insight into the Fed’s rate cut plans. Shares of Super Micro Computer plunged 24 percent after the artificial intelligence server maker announced a delay in filing its annual report for the fiscal year ending June 30. This news came a day after Hindenburg Research revealed a short position in the company. In other market news, Berkshire Hathaway’s market value briefly surpassed $1 trillion, with its Class A shares up 0.2 percent. Overall, declining stocks outnumbered advancing ones in the S&P 500 by a ratio of 1.8 to one.
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