NEW YORK: The main US indexes oscillated within a tight range on Tuesday as investors grew cautious ahead of AI chip leader Nvidia’s earnings this week and Federal Reserve officials emphasized the central bank was in no hurry to ease interest rates.
Nvidia, Wall Street’s third-most valuable firm, will report quarterly earnings on Wednesday in what is likely to be a significant market trigger and a litmus test for the success of the generative AI boom. “For investors to drive Nvidia shares even higher, they’re going to be looking for some very aggressive forward numbers that keeps them feeling that the stock could continue on its upward climb,” said Rick Meckler, partner at Cherry Lane Investments.
Data from options analytics firm Trade Alert showed Nvidia’s options are primed for an 8.7% swing, or $200 billion in market cap, in either direction by Friday.
Investors also awaited minutes from the Fed’s last policy meeting, due on Wednesday, with two rate-setters on Tuesday saying it was prudent to wait several more months to ensure inflation really is back on a path to the 2% target before commencing rate cuts.
Traders currently factor in about 44 basis points of rate reductions this year, with a quarter-point cut fully priced in for November.
Consumer discretionary was the worst hit major S&P 500 sector index, dragged by a 3.1% drop in Lowe’s after the home improvement company warned of operating margin pressure in the current quarter.
Automotive parts retailer AutoZone lost 3.4% after a third-quarter sales miss. The S&P 500 consumer discretionary distribution and retail index also dropped 1.1%.
JPMorgan Chase rose 1.3%, recovering from Monday’s 4.5% slide. That, coupled with gains in other major big banks, steered a 1.2% advance in the S&P 500 banks index.
The Dow fared better than its peers, boosted by financials and a 1.5% rise in Microsoft, a day after the tech giant launched its new line of personal computers with AI features. At 11:36 a.m. ET, the Dow Jones Industrial Average was up 60.90 points, or 0.15%, at 39,867.67, the S&P 500 was up 4.25 points, or 0.08%, at 5,312.38, and the Nasdaq Composite was down 2.48 points, or 0.01%, at 16,792.40.
Palo Alto Networks dropped 3.4% after its fourth-quarter billings forecast disappointed investors.
International Business Machines climbed 2.2% on plans to release a family of artificial intelligence models as open-source software and help Saudi Arabia train an AI system in Arabic.
Eli Lilly rose 2.5% after its diabetes drug tirzepatide received approval from Chinese regulators.
Macy’s was flat, erasing earlier gains driven by the department store operator raising its annual profit forecast, despite posting a bigger-than-expected drop in sales for the first quarter.
Peloton Interactive slumped 13.8% as the fitness equipment maker was looking to refinance its debt to regain its footing amid falling sales.
Declining issues outnumbered advancers for a 1.01-to-1 ratio on the NYSE and a 1.42-to-1 ratio on the Nasdaq.
The S&P index recorded 34 new 52-week highs and three new lows, while the Nasdaq recorded 62 new highs and 67 new lows.