© Reuters. FILE PHOTO: Traders work on the floor at the New York Stock Exchange (NYSE) in New York City, U.S., January 9, 2024. REUTERS/Brendan McDermid//File Photo
By Amruta Khandekar and Bansari Mayur Kamdar
(Reuters) – The tech-heavy Nasdaq led losses on Wall Street on Tuesday as chipmaker Nvidia (NASDAQ:) fell sharply in early trading, while retail industry bellwether Walmart (NYSE:)’s upbeat forecast limited losses on the Dow.
Shares of the chipmaker fell more than 4%, underperforming other megacap stocks and weighing on the Nasdaq.
As investors return following a long weekend, results from chip designer Nvidia will grab the spotlight after markets close on Wednesday and test market optimism around the potential for artificial intelligence (AI).
AI-fueled bets have helped Nvidia become the third-most valuable U.S. company and recently replace Tesla (NASDAQ:) as Wall Street’s most traded stock.
“The sellout that we’re seeing today is driven by the reversal in SMCI (Super Micro Computer (NASDAQ:)) because a lot of hot money was chasing these AI names and then we had the vicious selloff on Friday.”
Shares in Super Micro Computer extended losses by 6.2%, after finishing down 20% on Friday as investors took a break from betting on the stock as a big beneficiary of strong AI technology demand.
Hotter-than-expected U.S. inflation data last week dampened market expectations for an imminent start to the Federal Reserve’s easing cycle, halting a strong rally on Wall Street.
The rate cut is expected in June, according to a slim majority of economists polled by Reuters, who also flagged risk of a further delay in the first cut.
Investors are awaiting the release of minutes from the Fed’s latest policy meeting as well as remarks from a slew of central bank officials later this week.
Shares of the chipmaker fell more than 4% in early trading, underperforming other megacap stocks and weighing on the tech-heavy Nasdaq.
At 9:40 a.m. ET, the was down 31.08 points, or 0.08%, at 38,596.91, the was down 26.74 points, or 0.53%, at 4,978.83, and the was down 143.75 points, or 0.91%, at 15,631.91.
Walmart hit a record high and was last up 5.9% after the U.S. retail giant forecast fiscal 2025 sales largely above Wall Street expectations and raised its annual dividend by 9%.
Smart-TV maker Vizio jumped 15.1% after Walmart said it would buy the company for $2.3 billion.
The retail sector, however, fell 1.1%.
Home Depot (NYSE:) fell 1.3% after it forecast 2024 sales below Wall Street estimates, signaling that lackluster home-improvement demand would persist this year.
Discover Financial Services (NYSE:) surged 10.8% on Warren Buffett-backed consumer bank Capital One’s plans to acquire the U.S. credit card issuer in a $35.3 billion deal.
Intel (NASDAQ:) added 2.6% following a report on Friday that the Biden administration is in talks to award more than $10 billion in subsidies to the semiconductor firm.
GlobalFoundries (NASDAQ:) climbed 2.2% after the U.S. government on Monday awarded $1.5 billion to the contract chipmaker to subsidize semiconductor production.
Declining issues outnumbered advancers for a 1.81-to-1 ratio on the NYSE and for a 1.79-to-1 ratio on the Nasdaq.
The S&P index recorded 15 new 52-week highs and three new lows, while the Nasdaq recorded 34 new highs and 29 new lows.