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US stocks rallied late in the day on Wednesday as investors counted down to high-stakes earnings from AI darling Nvidia (NVDA) and digested the release of Federal Reserve minutes which reiterated the central bank’s focus on not cutting interest rates too soon.
The S&P 500 (^GSPC) rose more than 0.1%, while the Dow Jones Industrial Average (^DJI) popped about 0.1%, or almost 50 points. The tech-heavy Nasdaq Composite (^IXIC) led the way lower, down 0.3% on the heels of Tuesday’s declines.
Stocks are lagging, with the focus fixed on looming results from Nvidia, whose shares fell almost 3% on Tuesday for their worst day since Oct. 17 as investors positioned for the release. The stock extended that loss on Wednesday, falling more than 3% heading into its earnings release. Expectations are running high for the chipmaker’s fourth quarter results, seen both as a barometer for the AI trade and as a potential turning point for stocks more broadly.
The market is on edge for any disappointment in the report, expected after the bell. Nvidia is one of a small group of megacaps behind a big chunk of recent gains for stock indexes. Mixed prospects for growth among those “Magnificent Seven” stocks have prompted hedge funds to cut holdings, according to Goldman Sachs.
In corporates, shares of Palo Alto Networks (PANW) tumbled over 28% after the cybersecurity provider cut its annual revenue forecast, igniting concerns about a potential pullback in tech spending. Meanwhile, Walgreens shares (WBA) slid as much as 3% after the pharmacy giant lost its spot on the blue-chip Dow index to Amazon (AMZN).
Minutes from the Fed’s January meeting released on Wednesday showed most Fed officials “noted the risks of moving too quickly” in easing interest rates during the most recent meeting. Recent discouraging data has prompted a wavering in conviction that the central bank will cut rates in June, seen as the most probable timing.
After the closing bell, Nvida reported fourth quarter earnings, and first quarter revenue guidance, that exceeded Wall Street’s lofty expectations. The company guided for first quarter revenue of $24 billion plus or minus 2%, above Wall Street’s projections for $21.9 billion. Shares rose as much as 7% in after hours trading.
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