Stocks in the United States closed lower on Tuesday, with the Nasdaq experiencing the largest declines due to chipmaker Nvidia stumbling ahead of its highly anticipated earnings report. Meanwhile, gains in Walmart helped offset losses on the Dow Industrials.
Nvidia’s shares tumbled 4.35%, marking its biggest daily percentage drop since October 17. The broader Philadelphia semiconductor index also declined by 1.56%, with other chip stocks following suit. Investors are concerned about whether Nvidia’s quarterly results, expected after the market closes on Wednesday, will justify its high valuation. The company currently holds a forward price-to-earnings ratio of just over 32, leading to questions about its future performance.
Ken Polcari, managing partner at Kace Capital Advisors, expressed skepticism, stating, It is priced to perfection, no matter what they say they are probably going to take money out of it. This sentiment is reflected in the market as traders and asset managers anticipate potential profit-taking regardless of Nvidia’s earnings report.
On the positive side, Walmart closed at a record high after forecasting fiscal 2025 sales above Wall Street expectations and raising its annual dividend by 9%. The S&P 500 consumer staples index, which includes Walmart, saw a 1.13% increase, contrasting with the information technology sector’s decline of 1.27%.
While Walmart thrived, Home Depot faced challenges, with the home improvement retailer forecasting full-year results below analysts’ estimates. The uncertainty around rate cuts from the Federal Reserve also impacted market sentiment, causing a pause in Wall Street’s recent rally.
Smart-TV maker Vizio saw a significant jump of 16.26% after Walmart announced its acquisition of the company for $2.3 billion. Discover Financial Services surged 12.61% following Capital One’s plans to acquire the U.S. credit card issuer in a $35.3 billion deal, endorsed by Warren Buffett.
Overall, declining issues outnumbered advancers on the NYSE and Nasdaq, with a mix of highs and lows recorded on both indices. Market participants are eagerly awaiting the release of minutes from the Fed’s latest policy meeting and upcoming remarks from central bank officials for further insights into the economic landscape.
In summary, the U.S. stock market experienced a day of fluctuations driven by key players like Nvidia, Walmart, and other prominent companies. The outcome of Nvidia’s earnings report and the Federal Reserve’s future actions will likely shape the market’s trajectory in the days ahead.
