Stocks saw a mostly positive close on Wednesday, recovering from a recent technology-driven decline as investors anticipated Nvidia’s earnings report, which is expected to influence the next phase of the AI sector’s performance.
The Nasdaq Composite led the recovery, rising 0.6%, while the S&P 500 gained 0.4%, both indices trimming earlier more substantial gains. In contrast, the Dow Jones Industrial Average, with fewer tech stocks, managed a modest increase of about 0.1% after fluctuating throughout the trading day.
This upward movement comes at the end of a four-day stretch of losses largely attributed to weakness in the tech sector. Nvidia’s stock closed the session with a 2.8% uptick ahead of its third-quarter earnings announcement, which is anticipated to cause a swing in the stock price of up to 7%. The performance of Nvidia is particularly crucial, as it could be a pivotal point for the S&P 500’s impressive rally this year, driven by enthusiasm surrounding growth in AI technology.
Concerns regarding substantial investments by major tech companies in AI infrastructure have contributed to recent declines. High-profile investors have been actively reducing their stakes as apprehensions mount about companies like Amazon ramping up their borrowing to support AI developments, coinciding with indications from the Federal Reserve that interest rate cuts may slow down.
Market participants were keenly analyzing the Fed minutes released on Wednesday, which revealed divisions regarding potential interest rate cuts in December, mirroring the ongoing public discourse on monetary policy.
The focus will shift on Thursday with the release of the September jobs report, marking the first significant economic data following the government shutdown that delayed prior updates. This report takes on added importance, especially since the Bureau of Labor Statistics has canceled its October jobs report and postponed the November report to December 16. As investors look for signals about the economy and Federal Reserve policy direction, the upcoming jobs data could prove pivotal.
Overall, while tech sector volatility continues to pose challenges, there remains cautious optimism surrounding major earnings reports and economic indicators that could shape market trajectories in the months ahead.