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Wall Street closed lower on Tuesday as a drop in technology stocks a day before Nvidia's (NVDA) quarterly results offset a hit provided by a post-earnings gain in Walmart (WMT).
Market participants returned from a long weekend, with Monday being a Washington's birthday holiday.
The Nasdaq Composite (IND COMP.) fell the most among the three main averages, falling 0.92% to close at 15,630.78 points. technology stocks, including most large-cap companies, dragged the index lower as investors await Nvidia's (NVDA) earnings report on Wednesday. Expectations are sky-high for the chip giant, and its numbers will be a big test for Wall Street's ai-fueled rally.
“Nvidia (NVDA) reports fourth-quarter earnings after tomorrow's close. The stock has reported an earnings triple play (beat EPS estimates, beat sales estimates, raised guidance) in four fourth-quarter earnings reports consecutive and 7 of the last 8 dating back to 2016. Yes, expectations will be high,” Bespoke Investment Group said on X (formerly Twitter).
The S&P 500 Benchmark Index (SP500) fell 0.60% to settle at 4,975.56 points. The Dow Jones (dji) decreased 0.17% to conclude at 38,563.83 points, with losses on the frontline indicator limited by Walmart (WMT). The US retail giant's quarterly results and guidance sent its shares to a record high and boosted other retail stocks, while helping to overshadow a weak report from Home Depot (HD).
All 11 S&P sectors finished in the red, with the exception of Consumer Staples.
U.S. stocks broke a five-week winning streak on Friday, weighed down by reports of better-than-expected consumer and producer price indices that underscored how difficult the Federal Reserve's struggle was to bring inflation down to its target of 2%.
This week, the economic calendar will be quite light. Attention will focus on the Fed's minutes from its last monetary policy committee meeting, in which the central bank rejected the market's aggressive interest rate cut expectations.
“stocks and bonds remain under some pressure as the end of February approaches. Crude oil, copper and gold, the main industrial commodities, remain stable,” Andrew Hecht, leader of the investment group Hecht Commodity Report.
“The most important market developments this week are earnings announcements, including those from energy companies and Nvidia (NVDA). On Wednesday, the Federal Reserve will release its January FOMC minutes. Markets appear to have accepted that policy will be stable and that rates will remain in place for longer than expected at the beginning of this year,” Hecht added.
Turning to fixed income markets, Treasury yields fell on Tuesday. The 30-year yield (US30Y) fell 3 basis points to 4.45%, while the 10-year yield (US10Y) fell 5 basis points to 4.28%. The more rate-sensitive short-term 2-year yield (US2Y) fell 4 basis points to 4.61%.
See how Treasury yields have performed across the curve on the Seeking Alpha bond page.
As for active stocks on Tuesday, Discover Financial Services (DFS) rose and finished as the top percentage gainer in the S&P 500 (SP500). In a major move in the financial sector, Capital One Financial (COF) said late Monday that it would acquire Discover (DFS) in an all-stock deal valued at $35.3 billion.
In another M&A-related move, Vizio (VZIO) jumped after Walmart (WMT) agreed to buy the maker of televisions and home theater displays in a deal valued at about $2.3 billion.
