US stocks fell on Wednesday ahead of Nvidia’s (NVDA) earnings, seen as a crucial litmus test for the artificial intelligence trade that could set the direction of markets for days to come.
The Dow Jones Industrial Average (^DJI) was down about 0.3%, while the benchmark S&P 500 (^GSPC) fell about 0.8%. Meanwhile, the tech-heavy Nasdaq Composite (^IXIC) slipped about 1.2%, following a mixed day on Wall Street on Tuesday.
Investors are counting down to Nvidia’s results after the bell, hoping the last of the “Magnificent Seven” tech megacaps to report can provide some fresh momentum for stocks. It’s seen as a reality check on just how important the AI poster child (and its cousins) are to the two-year bull market.
The $3.61 trillion chipmaker, now the world’s most valuable company, has seen its stock surge 200% this year so far, hitting record highs after the presidential election. The European Central Bank has warned of a bubble in AI stocks amid high concentration and the risk that lofty earnings hopes won’t be met.
Nvidia’s share price was down more than 2%, after surging on Tuesday to buoy the Nasdaq to a win. Traders are bracing for a potential post-earnings swing of 8% — or $300 billion in market value — in either direction, going by options markets.
Elsewhere in corporates, Target (TGT) muted its outlook for holiday-season sales and profit after posting a big quarterly profit miss and slashing its full-year guidance. The retail giant’s shares sank more than 21% after the earnings.
Meanwhile, bitcoin (BTC-USD) prices were up more than 3% to hit a fresh record near $94,500 per token. Optimism for a crypto-friendly Trump White House has spurred the digital currency’s recent rally.
