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U.S. stocks on Wednesday were largely to the downside, as traders remained cautious ahead of Nvidia’s (NVDA) quarterly results after the closing bell.
Expectations surrounding the chip giant have reached stratospheric highs, especially in light of the artificial intelligence-fueled rally in the company’s stock that has also contributed massively to Wall Street’s overall bull run.
The tech-heavy Nasdaq Composite (COMP.IND) trailed the other two major averages, slipping 0.79% to 15,506.73 points in mid-day trade. A post-earnings slide in Palo Alto Networks (PANW) weighed on the index, after the cybersecurity company cut its annual revenue and billings guidance on account of softness in the industry. Other cybersecurity names and exchange-traded funds declined as well.
The benchmark S&P 500 (SP500) was lower by 0.30% to 4,960.75 points, while the blue-chip Dow (DJI) retreated 0.22% to 38,480.07 points.
Of the 11 S&P sectors, seven were in the green, led by Energy and Utilities. Technology topped the losers.
With all eyes on Nvidia’s (NVDA) numbers, Goldman Sachs’ trading desk called it “the most important stock on planet earth.” Nvidia (NVDA) has been on a tear, having reported a beat-and-raise quarter in seven of the last eight dating back to 2016. The performance has largely been driven by the artificial intelligence capabilities of its products.
“Nvidia (NVDA) has gone from being the 5th largest company in the U.S. to initially the 4th and then the 3rd largest but yesterday it slipped back to the 5th again as it fell -4.35% ahead of a very important earnings release today. This was the worst daily performance since last October,” Deutsche Bank’s Jim Reid said.
“However implied options suggest that that the post results move is priced to be 10.5% in either direction so stand by for potential fireworks across markets in either direction. After having said that they’ll probably end up being flat in after-hours trading by tomorrow’s EMR!” Reid added.
Market participants following monetary policy are also looking ahead to the release of the Fed’s minutes for its latest monetary policy committee meeting in the afternoon. Recall that it was at that meeting the central bank pushed back against the markets’ aggressive interest rate cut expectations.
Turning to the fixed-income markets, Treasury yields were higher ahead of an upcoming $16B 20-year bond auction. The longer-end 30-year yield (US30Y) was up 1 basis point to 4.47%, while the 10-year yield (US10Y) was up 3 basis points to 4.30%. The shorter-end more rate-sensitive 2-year yield (US2Y) was up 4 basis points to 4.65%.
See live data on how Treasury yields are doing across the curve at the Seeking Alpha bond page.
Looking at active movers, Garmin (GRMN) was among the top percentage gainers on the S&P 500 (SP500), after the maker of sports watches reported a quarterly top and bottom line beat.
Walgreens Boots Alliance (WBA) slipped, a day after S&P Dow Jones Indices said that pharmacy chain would be replaced by tech and retail giant Amazon (AMZN) in the venerable blue-chip Dow Jones Industrial Average (DJI) index.