4:18pm: Nvidia on deck
Tech stocks cooled in the afternoon but the Nasdaq still managed to finish in positive territory ahead of Nvidia’s latest earnings due after the bell.
The tech-stacked Nasdaq led gains on Wednesday, closing up 0.3% or 49 points at 19,075.
The S&P 500 eked out a small gain, ending the session up 0.02% or 1 point at 5,956, breaking a four-day losing streak for the benchmark index.
Meanwhile, the Dow fell 0.4% or 188 points to close at 43,433, marking its second consecutive day of losses.
Nvidia shares finished up 3.7% on the day, although investors will have to wait and see whether that enthusiasm will be short-lived following its 4Q report.
Market sentiment remained cautious as investors continued to assess the potential impact of President Trump's tariff plans on Canada and Mexico, set to take effect next month.
2:40pm: A closer look at new home sales
New home sales fell 10.5% in January, adding to weak housing data to start the year.
While positive revisions to December’s sales softened the decline, the annual pace of 657K units was still down 1.1% from a year earlier, reflecting the impact of high mortgage rates on buyer demand, analysts at Wells Fargo noted.
With elevated inventory levels, Wells Fargo said that builders are expected to remain cautious amid a shifting economic and policy landscape.
12:49pm: Stocks bounce off lows
As of midday, US stock indices are mixed but generally positive, with investors focused on key economic data and corporate earnings.
Leading the charge, the Nasdaq Composite is up 0.9%, driven by anticipation surrounding major tech earnings, particularly Nvidia’s report due later today.
The Dow Jones Industrial Average is trading flat, holding steady amid market fluctuations. The S&P 500 has gained 0.5%, rebounding from recent losses as cautious optimism prevails.
“US stock indices bounce off one-month lows ahead of highly anticipated Nvidia earnings,” said Axel Rudolph, senior technical analyst at IG.
Rudolph noted that despite a larger-than-expected drop in US new home sales, investors are looking to Nvidia’s results as a key factor that could shape market direction in the coming days.
In commodities, most prices slipped on Wednesday, with the exception of copper and steel, which rose over 1% amid renewed US tariff threats. Gold, silver, and crude oil remained little changed, while natural gas and heating oil dropped by around 2.5% to 3% due to milder weather forecasts.
11:50am: Nvidia set to benefit from AI hardware demand
Nvidia is set to report fourth-quarter earnings this afternoon, with analysts weighing potential outcomes ahead of the company's highly anticipated GPU Technology Conference (GTC) in March.
Bank of America analysts see Nvidia benefiting from strong AI hardware demand.
In a note Wednesday, analysts outlined three scenarios: a baseline case where Nvidia beats expectations but issues cautious guidance due to Blackwell chip delays and China restrictions; a bullish case with revenue exceeding estimates by $1-2 billion per quarter and gross margins above 71-72%; and a bearish case where results align with expectations but first-quarter guidance disappoints, putting the stock at a lower valuation.
Swissquote analyst Ipek Ozkardeskaya cautioned that while fourth-quarter revenue is projected at $38 billion, risks remain. "Big Tech companies that include names like Meta, Microsoft, Apple, Amazon, are nothing to be minimized as they made up to 50% of Nvidia’s revenue in Q3," Ozkardeskaya said.
11:02am: Dollar trading positively
The US Dollar traded positively ahead of key economic releases this week, which could influence investor sentiment, according to XTB's Milad Azar.
"Recent data reported a sharp decline in consumer confidence and mixed PMI numbers, raising concerns surrounding economic growth and weighing on the greenback," Azar commented.
"Market participants will therefore closely monitor tomorrow's GDP growth and Friday's PCE numbers, as they could provide crucial hints on the Fed's next move.
"Robust data will likely reinforce a hawkish narrative and boost the dollar, while softer data may fuel selling pressure."
9.59am: Nasdaq lifted by Nvidia and other semis stocks
As expected, the tech-powered Nasdaq has led an early rebound on Wall Street on Wednesday, rising 0.9%.
The broader S&P 500 has climbed 0.6% so far and the Dow Jones 0.25%.
A 3%-plus gain for Nvidia was powering a large part of the rise, along with other chipmakers, offset Apple slipping 1.6% and Alphabet also sitting slightly in the red.
7.55am: Nasdaq expected to lead Wall Street rebound
US stocks are expected to bounce back on Wednesday after a mixed session the day before.
Futures for the S&P 500 were up 0.5% ahead of the opening bell, with the tech-powered Nasdaq seen up 0.7% and Dow Jones futures up 0.25%.
Sentiment might have been boosted after news broke that the House of Representatives passed a budget blueprint that will contain a raft of tax cuts.
This followed respective declines of 0.5% and 1.35% for the S&P and Nasdaq the previous session, while the Dow had added 0.4%.
Market sentiment yesterday turned negative due to mounting angst over the US economic outlook following soft data recently, with yesterday seeing the Conference Board’s consumer confidence indicator hitting an eight-month low.
Along with equities, credit spreads widened, bond yields fell and commodities sold off too.
A four-day decline for the S&P 500 was the largest reverse since early September, Deutsche Bank noted, almost entirely due to the Magnificent 7 falling back into technical correction territory, having shed more than 10% from their December peak to heighten the focus on Nvidia’s earnings after the US close tonight.
By contrast, analysts highlighted that most of the S&P 500’s constituents put in a steady performance, with the equal-weighted S&P index eking out a second consecutive gain.
Meanwhile, Bitcoin saw the biggest daily fall since early September.
On the rates side, markets dialled up expectations for Federal Reserve rate cuts this year, with futures pricing in slightly more than half a percent of cuts by the end of the year, up 7.8bps on the day.
"And with investors growing more confident about rate cuts, that led to a significant decline in Treasury yields across the curve. For instance, the 2yr yield (-8.0bps) fell back to 4.10%, its lowest level since October, whilst the 10yr yield (-10.6bps) fell to 4.29%, its lowest since early December," Deutsche's Jim Reid said.
He also noted that commodities "took a particular hit given fears about economic demand", and Brent crude oil prices falling back to their lowest since December.
Despite this, US indices managed to bounce off their lows and they have continued to rally this morning. This has helped to lift European stock indices, with the Euro Stoxx 50 and German DAX back within striking distance of last week’s all-time highs. European equities have outperformed their US counterparts so far this year. Investors have looked to diversify away from mega-cap US corporates with their historically high valuations, and into potentially better-value European companies.
The US dollar is firmer across the board this morning. The Dollar Index has recovered a touch, having pulled back sharply from highs seen earlier this month. It has found some support around the 106.00 region. This area acted as resistance throughout April and May last year, and between September and November in 2023. Bitcoin has also bounced off yesterday’s lows when it fell back to levels last seen just after Trump’s Presidential election win. But it continues to trade below $90,000 with the $100,000 key target feeling further away than ever.
US Markets
US stock index futures were sharply higher early trade this morning, led by the tech-heavy NASDAQ. Super Micro Computer (SMC) contributed to the gains, rallying 26% in after-hours trade as it managed to beat the deadline for submitting its delayed financial statements. The stock lost 65% between October and November last year as investors ran for the hills after the SEC charged the company with accounting violations and on the resignation of its auditors. SMC’s stock has regained all these losses and more, but remains 50% below its peak from March last year.
NVIDIA, the world’s leading generative AI chipmaker, reports after tonight’s close. This could be pivotal, not just for the company, but in setting overall market direction, at least in the short term. This will be the first earnings update from the company since Chinese upstart DeepSeek managed to upset the US’s generative AI industry by producing an assistant of equivalent quality but at a fraction of the cost. DeepSeek’s AI assistant is ‘open source’, which effectively drains the moat thought to surround specific generative AI companies in the US.
Concerning this, there had been rumours that Microsoft was cancelling leases for data centre expansion. The company refuted this speculation yesterday, just as Apple said it would invest $500 billion in the US and add 20,000 jobs over the next four years. As of yesterdays’ low, NVIDIA was down 19% from its peak in early January. It has recovered a touch since then, and was up 2.5% earlier this morning.
More generally, US stock indices have had a rocky ride over the past week. The S&P 500 hit an all-time high of 6,147 last Wednesday, but has sold off ever since, coming within a few points of 5,900 yesterday morning. That appears to be a significant level for the index, and a protracted break below here could signal trouble ahead. Trump’s tariff threats are back in focus, while yesterday saw another drop in US Consumer Confidence. Once NVIDIA’s earnings are absorbed, investors will turn to Friday’s key inflation update, Core PCE.
Commodities and Metals
Crude oil - Crude suffered another significant pullback yesterday. It fell around 3%, equalling its losses from Friday’s session. Front-month WTI crashed below the $70 support region and is now trading at levels last seen just before Christmas. This is hardly encouraging for the bulls. Although it’s worth noting that oil began a rally from these levels in late December, even though the daily MACD showed it was less oversold than it is currently. Having noted that, crude isn’t significantly oversold at current levels. So while a recovery could start from this area, it doesn’t seem likely given the negative sentiment and the ease with which sellers can dominate the market. Crude’s sell-off yesterday coincided with slides across US equities and precious metals in what was a broad-based ‘risk-off’ move. But unlike other markets, oil prices have failed to bounce off its lows. President Trump’s tariff threats and yesterday’s dire US Consumer Confidence number did nothing to bolster sentiment.