Nasdaq leads Wall Street declines as Nvidia earnings awaited

Nasdaq leads decline: Wall Street's major indexes ended lower on Wednesday, with the Nasdaq taking the lead in declines, as investors focused on Nvidia's upcoming earnings report. The performance of Nvidia and other tech stocks, which have driven the recent bull market rally, is under scrutiny to determine if the trend can continue.

The Dow Jones Industrial Average and the S&P 500 have experienced fluctuating gains and losses this week. The Dow remains close to a record high, while the S&P 500 is just 1 per cent shy of its all-time peak. The market awaits Nvidia's results, which are set to be announced after the closing bell.

Nvidia stock in flux

Nvidia's shares dropped by 2.5 per cent, and traders are bracing for a potential swing of around 9.8 per cent in the company's stock price on Thursday, according to ORATS data. Any disappointing results from Nvidia could impact other major tech stocks and semiconductor companies that have been central to 2024's market rally, driven by expectations of AI integration boosting profits.

Sam Stovall, Chief Investment Strategist at CFRA Research, noted, "Investors are anxious about Nvidia's report due to high expectations. The results will influence Nvidia's stock, the tech sector, and the broader market."

Other semiconductor stocks, including Broadcom and Advanced Micro Devices, also faced declines, with the Philadelphia SE Semiconductor Index dropping by 1.9 per cent. Growth stocks broadly were in the red, with Meta, Microsoft, and Alphabet seeing losses of 0.7 per cent, 1.1 per cent, and 1.3 per cent, respectively.

As of 11:49 am ET, the Dow was down by 137.89 points (0.33 per cent) to 41,112.61, the S&P 500 had fallen by 35.66 points (0.63 per cent) to 5,590.14, and the Nasdaq Composite was down by 214.22 points (1.21 per cent) to 17,540.60.

Amongst the S&P 500 sectors, technology stocks led the declines with a 1.5 per cent drop, although bank stocks saw a rise of over 1 per cent, with Wells Fargo and Bank of America each gaining more than 1 per cent.

Rate cut expectations rise

Optimism about a potential rate cut by the US Federal Reserve in September continued to influence the market. Following Fed Chair Jerome Powell's recent comments supporting policy adjustments, market expectations for a 25-basis point rate cut stand at 63.5 per cent, while a 50-bps reduction has a 36.5 per cent probability, according to CME Group’s FedWatch Tool.

The Personal Consumption Expenditure (PCE) report for July, due on Friday, is anticipated to provide further insights into the Fed's future rate adjustments.

Super Micro Computer saw a drop of 24.8 per cent after announcing a delay in its annual report filing for the fiscal year ending June 30, coinciding with Hindenburg Research’s disclosure of a short position in the company.

Notably, Warren Buffett’s Berkshire Hathaway saw its market value exceed $1 trillion, with class B shares rising by 0.8 per cent.

On the NYSE, declining issues outnumbered advancers by a ratio of 1.47-to-1, and on the Nasdaq, the ratio was 2.00-to-1. The S&P index recorded 73 new 52-week highs and one new low, while the Nasdaq saw 63 new highs and 68 new lows.