4:10pm: Nvidia's earnings key to broader tech sentiment
A decline in tech stocks led by Nvidia drove markets lower on Wednesday, with investors anxiously awaiting the chipmaker's earnings report.
At the close, the Dow was down 0.4% at 41,091, the S&P 500 fell 0.6% at 5,592, and the Nasdaq dropped over 1.1% to finish at 17,556.
Nvidia’s earnings are a key indicator for the broader market and AI sector, which is why all eyes will be on their stock aftermarket Wednesday. Nvidia shares closed 2.1% lower at $125.61.
2:45pm: 'Wait until after the bell'
Trading volume is down on Wednesday, but "wait until after the bell," notes Quincy Krosby, Chief Global Strategist for LPL Financial.
"Trading volume has been down markedly as Labor Day weekend approaches, but the long-awaited NVIDIA (NVDA) earnings call after today's market call - viewed globally as the most significant "tell" about the outlook for AI spending by big tech that is already spending billions of dollars ramping up AI capabilities - is expected, based on consensus estimates, to confirm that demand remains strong," Krosby wrote.
"But for markets, meeting expectations may not be enough to underpin the share price. Stronger and optimistic guidance has been increasingly crucial for investors and traders alike. There's the issue of the delay in chip sales based on the advanced Blackwell construction that needs to be addressed, and questions as to whether companies can monetize their AI capabilities after allocating billions for their AI infrastructure buildout."
1:15pm: Markets in 'fragile mood'
Stocks are in a “fragile mood” ahead of Nvidia earnings tonight, noted Chris Beauchamp, Chief Market Analyst at online trading platform IG.
By early Wednesday afternoon, the Dow Jones fell by nearly 0.3%, the S&P 500 dropped over 0.6%, and the Nasdaq decreased by more than 1.2%.
Nvidia, a key player in the AI sector, saw its shares fall by about 3.5% ahead of its second-quarter results.
“Nvidia’s earnings tonight could well set the tone at least until the next payrolls report, and possibly until the Fed decision in September,” Beauchamp noted.
“A miss now would likely spark the next big risk-off move, reversing much of the recent recovery. Meanwhile a better set of numbers could give stocks the lift they have been looking for this past week.”
11:30: Nvidia to reset AI narrative
As the leading proxy investment for the artificial intelligence trend, the market is looking to Nvidia’s founder and figurehead Jensen Huang to reset the narrative at a time when initial hype for AI has started to cool off, Proactive's William Farrington writes.
"We continue to estimate for every $1 spent on an NVIDIA GPU chip there is a $8-$10 multiplier across the tech sector which speaks to our firmly bullish view of tech stocks over the next year," Wedbush analyst Dav Ives added.
As for the specifics, the giant is expected to post earnings of $0.65 per share on $28.24 billion in revenue, with a "whisper number" of $0.71 per share, according to a report carried by Forbes.
The stock, already up over 160% this year, is trading near record highs, reflecting its status as a bellwether for both the tech sector and the broader market.
9.53am: Stocks move lower early on
Wall Street faced a cautious start to the day on Wednesday as investors awaited Nvidia’s latest update after the market’s close.
The Nasdaq headed 30 points down at the open, while the Dow Jones and S&P 500 just moved into the red.
Nvidia’s post-market report is set to dominate proceedings on Wednesday given the chip maker’s heavyweight position, with forecasts being for yet another earnings beat.
Nvidia moved 1.1% lower as the market opened ahead of its update, with analysts noting options pricing implied a 10% swing either way if the company beat or fell short of expectations in the results.
“The fear coming into this earnings report is the unforgiving nature of market expectations, with the company priced for perfection,” Scope Markets analyst Joshua Mahony commented.
“Markets will want to see the already incredible pace of growth maintained or bettered, despite the fact that such expansion is quite clearly unsustainable.
“Any signs that Nvidia’s growth may have peaked could yet cause widespread losses for equities, providing a potential sign that the AI trade has started to ease off.”
CrowdStrike, another of Wednesday’s reporters, also moved lower as trading got underway, with the after-hours update due following last month’s global IT outage.
7.26am: Stocks set for cautious start ahead of Nvidia update
Futures had the Nasdaq, Dow Jones and S&P 500 just off the mark ahead of Wednesday’s opening bell and much-anticipated results for Nvidia Corp later.
Nvidia is due to report after the market closes on Wednesday, with expectations “sky-high” for its latest in a string of earnings beats, according to Swissquote Bank analyst Ipek Ozkardeskaya.
“Nvidia has a weight of around 6% in the S&P 500 and it accounted for a third if its gains of the index this year,” she said.
“So the company’s earnings announcement day is naturally a big day for the market.”
The S&P 500 was seen just in the red ahead of the market's open, while futures showed the Dow Jones and Nasdaq off 4 and 2 points respectively.
Ozkardeskaya noted post-market volatility could be on the cards after Nvidia’s update, with the company forecasting second-quarter sales of US$28 billion, but the market anticipating this to climb as high as US$32 billion.
“Based on options pricing, the stock could move around 10% up and down after the results,” she said.