At midday on Wednesday, U.S. stocks showed mixed performance. The Dow Jones Industrial Average turned negative, while the Nasdaq Composite and S&P 500 pared earlier gains. Investors awaited Nvidia's earnings report, hoping it would ease concerns about overvaluation and excessive hype in AI-related stocks.
The Dow fell 93.51 points, or 0.20%, to 45,998.23. The Nasdaq rose 71.14 points, or 0.32%, to 22,503.99, and the S&P 500 gained 9.82 points, or 0.15%, to 6,627.14. Nvidia's shares climbed ahead of its third-quarter earnings release after the market close. Other chip stocks, including Advanced Micro Devices and Broadcom, also advanced.
Chris Senyek of Wolfe Research noted, "We continue to believe fears of an AI bubble bursting are overblown—at least for now." He added, "If the U.S. economy faces a soft patch, tech and communication services firms are well-positioned to weather temporary turbulence. We remain buyers of AI-related stocks on weakness but await stronger earnings from Nvidia or a deeper technical correction before increasing exposure."
On Tuesday, the Dow and S&P 500 logged their fourth consecutive decline, with the S&P 500 marking its longest losing streak since August. The tech-heavy Nasdaq Composite fell for the fifth time in six sessions. Bitcoin briefly dipped below $90,000 before recovering, while gold rebounded from a one-week low.
Most sectors closed higher on Tuesday, but key tech stocks again dragged the market lower. AI favorites like Nvidia, Palantir, Microsoft, and AMD all ended in the red. The Technology Select Sector SPDR Fund (XLK) dropped 1.6%. Tech and consumer discretionary were the worst-performing sectors this month, while healthcare led gains.
Tech stocks remained under pressure ahead of Nvidia's closely watched Q3 results. Analysts widely expect the chip giant—the largest component by market cap in major indices—to significantly surpass Wall Street estimates, driven by strong demand for its AI chips and infrastructure.
Nvidia, the dominant supplier of GPUs critical to AI development, holds an 84% share of the discrete GPU market and ships nearly 4.5 times more units than rival AMD in PCs. The company has been a key driver of global stock rallies and the surge in AI-related equities. According to LSEG data, its August-October quarter revenue is projected to jump 56% year-over-year to $54.92 billion.
However, the bar is high. Recent profit-taking in tech reflects growing concerns that the AI frenzy has pushed valuations of Nvidia and other megacap tech firms to unsustainable levels.
In economic data, the U.S. Bureau of Economic Analysis reported August imports fell 5.1% month-over-month to $340.4 billion, while exports edged up 0.1% to $280.8 billion from $280.6 billion in July. The trade deficit narrowed to $59.6 billion from $78.2 billion, against economists' median forecast of $60.4 billion.
The Federal Reserve will release minutes from its latest policy meeting later Wednesday. Market sentiment remains subdued as expectations for a December rate cut fade, with traders now pricing in less than a 50% chance of a 25-basis-point reduction.
Jefferies' Chief Economist Mohit Kumar noted, "We expect the minutes to reveal deep divisions within the Fed, balancing concerns over labor market softening against persistent inflation."
**Notable Movers**: - Memory chipmakers broadly advanced. - Google's Gemini 3 quickly topped major AI model rankings after launch. - Lowe's Q3 adjusted EPS beat estimates. - Unity Software partnered with Epic Games to integrate its engine into *Fortnite*. - Elbit Systems secured a $210 million Israeli Defense Ministry contract. - Adobe neared a $1.9 billion deal to acquire SEO software firm Semrush. - DoorDash rose after Jefferies upgraded it from "Hold" to "Buy." - Freeport-McMoRan's Grasberg mine in Indonesia will resume operations in Q2 2024. - Amer Sports lifted its FY2025 guidance after a stronger-than-expected Q3.