On Wednesday, the primary indexes on Wall Street experienced a decline, pulling back from the previous session’s surge as investors expressed concerns regarding the intensification of Russia-Ukraine conflicts and disappointing earnings from Target, while also looking forward to results from the major player Nvidia.
The drop in stocks followed news that Ukraine had launched long-range British Storm Shadow missiles into Russian areas. Earlier on Tuesday, Ukraine utilized U.S.-made ATACMS missiles against Russia, and in response, Russia declared it had reduced its threshold for nuclear engagement.
The “fear gauge” of Wall Street rose to 18.79 before settling back to 18.04, remaining at its highest level since the U.S. presidential election on November 5.
“Today has taken a more defensive stance following yesterday’s strong rally in growth stocks and the tech sector,” stated James Regan, Director of Wealth Management Research at D.A. Davidson.
“There might be a cautious outlook in anticipation of Nvidia’s earnings, along with a broader reaction to Target’s results, which is seen as a consumer indicator. Additionally, there are escalating geopolitical tensions regarding Ukraine, Russia, and the U.S. pulling diplomats from embassies,” Regan mentioned.
Nvidia, a leader in AI, experienced a 2.2% decline ahead of its earnings report, set to be released after the market closes. This setback affected the Information Technology sector, which dropped by 1.15%, along with the tech-heavy Nasdaq.
Target’s stock plummeted by 20.7% after the retailer projected holiday-quarter comparable sales and profits that fell short of Wall Street’s anticipations, following a disappointing third-quarter estimate.
The consumer discretionary sector was the biggest loser, decreasing by 1.3%.
Growth stocks such as Tesla and Amazon.com fell by 1.5% and 1.6%, respectively.
Attention remained focused on Nvidia, whose value has nearly tripled this year, contributing about 20% to the S&P 500’s returns over the past year, as per BofA Global Research.
Nevertheless, with high earnings expectations, the company may find it challenging to meet investors’ demands. Options traders are anticipating a nearly $300 billion fluctuation in Nvidia’s market capitalization following the earnings report.
“We are beginning to observe comments from larger firms investing in AI and tech spending that highlight how this expenditure translates into increased revenue or cost efficiencies. This is promising for companies like Nvidia that are positioned in the foundational realm of tech and AI investments,” mentioned Bill Merz, head of Capital Markets Research for U.S. Bank’s asset management division.
As of 2:10 p.m. ET, the Dow Jones Industrial Average decreased by 131.56 points, or 0.30%, to 43,137.38, the S&P 500 dropped 40.45 points, or 0.69%, to 5,876.53, and the Nasdaq Composite lost 183.64 points, or 0.97%, to 18,803.83.
Cryptocurrency stocks rose as bitcoin surged past $94,000, with MicroStrategy and MARA Holdings increasing by 14.5% and 17.7%, respectively.
Traders have increased their expectations that the U.S. central bank will keep interest rates steady at its December meeting, following robust economic indicators and persistent inflation signs.
At the NYSE, declining stocks outpaced advancers by a ratio of 2.17-to-1, while on the Nasdaq, the ratio was 1.74-to-1.
The S&P 500 recorded 28 new 52-week highs and 12 new lows, while the Nasdaq Composite noted 81 new highs and 138 new lows.
Online brokerage Firstrade is set to introduce overnight trading in early 2025, joining others in offering retail investors the opportunity to trade U.S. stocks and exchange-traded funds outside standard trading hours.
U.S. investors have noticeably increased around-the-clock trading volumes during significant events like the U.S. presidential election and the market downturn seen in early August.
In October, Charles Schwab announced an extension of the list of securities available for overnight trading, while competitor brokerage Webull also unveiled its own overnight trading session that same month.
