Financial uncertainty on Wall Street escalates due to Fed's cautious stance
U.S. stock markets opened lower on Wednesday as investors awaited Nvidia's earnings report, with concerns over higher inflation led by the Federal Reserve pushing indices into the red.
Following strong gains the previous day, Wall Street opened lower amid investors' eagerness for Nvidia's earnings report and guidance. Analysts warned of "disappointment potential" for the semiconductor AI leader, with the key question being how export restrictions and tariffs will impact long-term forecasts. The Dow Jones Index closed down 0.6% at 42,099 points, while the S&P 500 and Nasdaq Composite fell 0.6% and 0.5%, respectively.
Nvidia's earnings report, due after the close, is crucial for the entire stock market. Analysts believe it could revive investor optimism and help focus attention on the power of AI rather than Washington's trade and tax headlines. After volatile movement in the days following strong gains, Nvidia's stock fell 0.5%.
The Federal Reserve's meeting minutes, released in the evening, pushed stocks to their lows. Fed representatives expressed concerns about inflation picking up due to President Donald Trump's trade policies. An auction of five-year U.S. Treasury notes also kept investors on their toes.
According to recent data, there were 702 advancers and 2,080 decliners at the NYSE, with 44 stocks remaining unchanged. The earnings report is significant not just for Nvidia but for the entire stock market, as it could provide clarity and direction to investors amidst ongoing trade tensions and global economic uncertainty.
Meanwhile, oil prices rose by up to 0.8 percent amid expectations of further sanctions against Russia. With no genuine willingness for a ceasefire in the Ukraine conflict, signs increased that US President Donald Trump could also lose patience and impose new sanctions, particularly on the oil sector. However, prices retreated significantly from their daily highs as the Opec+ cartel group was expected to decide on a production increase on Saturday.
Gold prices remained slightly negative, influenced by rising US market interest rates and a strong dollar. As for General Motors, the company lost 1.9 percent, as it has scrapped a significant investment in electric motor production and will instead invest multiples of that amount in the production of the latest V8 engines.
Salesforce, on the other hand, saw a drop of 0.3% after announcing its acquisition of cloud platform Informatica for $8 billion. The company will also release earnings after the closing bell. Stellantis fell 3.1 percent, following the appointment of a successor to CEO Carlos Tavares, who will step down at the end of 2024.
The U.S. administration granted Chevron a license to maintain its oil production in Venezuela. The US oil company can maintain important infrastructures in the South American country but cannot import oil from it. Finally, Gamestop plummeted after the video game retailer's initial positive reception of its Bitcoin purchase. Department store chain Macy's saw a drop of 0.5%, while Abercrombie & Fitch jumped 14.7 percent and Vail Resorts rose 8.8%.
The Commission has also been consulted on the draft investment strategy for businesses, as the Nvidia earnings report, due after the close, is crucial for the entire stock market. Finance experts believe that Nvidia's earnings could revive investor optimism and allocate more funds towards AI-focused businesses.
