NEW YORK: The S&P 500 and the Nasdaq advanced on Wednesday following a sharp sell-off earlier in the week, with tech stocks leading the way ahead of Nvidia’s earnings that could prove to be a make-or-break moment for the AI trade.
Nvidia’s earnings, due after markets close on Wednesday, are seen as a litmus test for the AI-driven rally that has pushed markets to record highs this year.
The rising market has recently come under scrutiny on doubts around monetization of the technology, circular spending within the industry and high debt levels at tech companies to fund AI investments.
Options data from analytics firm Option Research & Technology Services (ORATS) showed an implied move of about 7 percent for Nvidia’s stock in either direction after its results.
Shares of the AI giant gained 2.1 percent after falling about 4.6 percent in the last two sessions.
“With NVDA, it has usually been a case of not if they beat earnings, but by how much as the company has exceeded both top and bottom-line expectations for 11 straight quarters,” said Adam Turnquist, chief technical strategist for LPL Financial.
Most megacap and growth stocks were mixed, though Alphabet outperformed with a 3.6 percent jump to hit all-time highs.
Worries over high valuations and dwindling expectations of a December interest rate cut have weighed on the markets of late, with the S&P 500 recording its fourth consecutive day of losses on Tuesday.
Including Wednesday’s move, the US benchmark has dropped about 4 percent from its October peak and stands 12.5 percent higher on a year-to-date basis.
While tech stocks boosted the market, energy lagged with a 1.7 percent drop as oil prices slid following a report of a US proposal to end the Russian war in Ukraine.
At 11:44 a.m. ET, the Dow Jones Industrial Average fell 97.78 points, or 0.21 percent, to 45,993.96, the S&P 500 gained 16.59 points, or 0.25 percent, to 6,633.91 and the Nasdaq Composite gained 117.65 points, or 0.52 percent, to 22,550.41.
The blue-chip Dow lagged as losses in health insurer UnitedHealth and planemaker Boeing weighed.
Declining issues outnumbered advancers by a 1.48-to-1 ratio on the NYSE and by a 1.37-to-1 ratio on the Nasdaq.
The S&P 500 posted 10 new 52-week highs and 19 new lows while the Nasdaq Composite recorded 38 new highs and 197 new lows.
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