Wall Street’s main indexes were set for a higher open on Wednesday following sharp losses earlier in the week, as investors set their eyes on Nvidia’s earnings which 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 questions around monetization and circular spending within the industry.
Options data from analytics firm Option Research & Technology Services (ORATS) showed an implied move of about 7% for Nvidia’s stock in either direction after its results.
Shares of the AI giant gained 1.8% in premarket trading after falling about 4.6% in the last two sessions.
Other megacap and growth stocks traded in the flat-to-higher band, with Alphabet leading gains with a 1.4% rise.
“We may have a little more back and forth that investors have been primed for this whole year to buy the dip and we certainly have had pretty big dips,” said Melissa Brown, SimCorp’s managing director of investment decision research.
Wall Street retreats as high valuations, rate-cut doubts weigh
“At least for now, some of these high flying names may still get support as investors view the current prices as more attractive”
At 08:46 a.m. ET, S&P 500 E-minis were up 17 points, or 0.26%, Nasdaq 100 E-minis were up 79.5 points, or 0.32%, and Dow E-minis were up 70 points, or 0.15%.
Big-box retailer Target dropped 3.4% after reporting a bigger-than-expected drop in quarterly sales with cash-strapped U.S. consumers pulling back on discretionary spending. Rival Walmart is scheduled to report later this week.
Lowe’s LOW.N advanced 5.4% after the home improvement retailer posted third-quarter profit above expectations. Rival Home Depot cut its annual forecasts on Tuesday amid consumer concerns over cost of living.
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.
As of last close, the U.S. benchmark has dropped nearly 4.4% from its October peak and stands 12.5% higher on a year-to-date basis.
Speaking to Bloomberg News on Tuesday, Goldman Sachs Group President John Waldron said the markets are primed for possible further declines.
The S&P 500 and the Nasdaq both closed below their 50-day moving averages earlier this week - an important technical threshold - for the first time since late April.
Later in the day, minutes from the Fed’s October policy meeting - where the central bank cut rates by 25 basis points - are on investors’ radar.
On Thursday, the September U.S. jobs report would be in focus after being delayed because of the long government shutdown, but it may do little more than confirm earlier private market surveys pointing to a cooling labor market.
Before the bell, DoorDash rose 2.5% after Jefferies upgraded its rating on the online food delivery platform to “buy” from “hold”.
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