Wall Street slid on Wednesday, as a tech selloff intensified ahead of chip giant Nvidia’s (NVDA) quarterly results, an event that Wedbush thinks marks the “most important week for the stock market this year.”
Into the final two hours of trading, the tech-heavy Nasdaq Composite (COMP:IND) was -1.58% to 17,473.74 points, while the benchmark S&P 500 (SP500) was -1.01% to 5,568.61 points. The blue-chip Dow (DJI) was -0.84% to 40,902.69 points.
It might be unusual to think of market direction hinging on just one stock, but that is a testament to the importance of Nvidia (NVDA) in investors’ minds. The company has become the barometer for demand for artificial intelligence (AI) chips, and its dominance in that area has made it a primary driver of Wall Street’s current bull run.
“When you combine $NVDA’s weight in the S&P 500 with its average volatility in response to earnings, it towers over all other stocks in terms of its impact on the market in reaction to its reports,” Bespoke Investment Group noted on X (formerly Twitter).
Options market activity in Nvidia (NVDA) has already shown outsized activity. The stock has moved on average about 8% after earnings over the past 12 quarters, and another move of that magnitude today could result in a market cap move of around $250B.
Deutsche Bank’s Jim Reid said recent reactions to the company’s reports “rival the sort of moves taking place after surprise jobs reports or CPI releases.”
Tech was already under the gun as traders waited for Nvidia’s (NVDA) report after the closing bell. Super Micro Computer (SMCI) earlier in the day said it was delaying its annual filing. The AI server maker’s announcement sent its shares plunging more than 21% and sparked concerns in the AI and semiconductor space. Nvidia (NVDA), memory chipmaker Micron (MU), and British chip designer Arm (ARM) shed between 2% to 6%.
Of the 11 S&P sectors, eight were in the red. Technology and Consumer Discretionary topped the losers, shedding nearly 2% each.
With the spotlight firmly on Nvidia (NVDA), there was little else to grab attention on Wednesday. The economic calendar was fairly light, with only the Atlanta Federal Reserve’s monthly survey of business uncertainty on the docket. The data showed that sales revenue growth expectations have returned to their pre-COVID average.
Turning to the fixed-income markets, U.S. Treasury yields moved slightly higher as bonds were dumped after a $70B 5-year note auction tailed.
See live data on how Treasury yields are doing across the curve on the Seeking Alpha bond page.
Looking at other active stocks, J.M. Smucker (SJM) was among the top percentage losers on the S&P 500 (SP500). The company, which owns brands such as Jif peanut butter and Hostess Twinkies, slashed its annual revenue guidance.
Dow 30 component Salesforce (CRM) fell nearly 2% ahead of its results after market close. Cybersecurity firm CrowdStrike (CRWD) will also be announcing numbers in its first quarterly report since a faulty update it issued in July led to a historic worldwide IT outage that affected millions of Microsoft (MSFT) Windows devices.
