The tech-heavy Nasdaq has fallen as investors grow cautious ahead of AI chip leader Nvidia’s earnings this week and Federal Reserve officials emphasise the central bank is in no hurry to ease interest rates.
Nvidia shares fell 1.3 per cent ahead of its quarterly earnings announcement on Wednesday that is likely to be a significant market trigger and a litmus test for the success of the generative AI boom.
Losses in chipmakers pushed the Philadelphia SE Semiconductor index down 1.2 per cent.
Memory chip maker Micron dropped 2.2 per cent after raising its full-year capital expenditure forecast.
Nasdaq eased off its record-high closing level hit on Monday while information technology stocks led losses among the 11 S&P 500 sectors, down 0.5 per cent.
“Because Monday was strong for Nasdaq, I’d respectfully say today’s a mean reversion day,” said Louis Navellier, chief investment officer at Navellier and Associates.
Data from options analytics firm Trade Alert showed Nvidia’s options are primed for an 8.7 per cent swing, or $US200 billion ($A300 billion) in market cap, in either direction by Friday.
Navellier said Nvidia shares were “priced for perfection” but noted the volume of options trading on the stock meant “it’s going to be very interesting to see the aftermath”.
Investors are also awaiting minutes from the Fed’s last policy meeting due on Wednesday.
Atlanta Fed chair Raphael Bostic said the US central bank needs to be cautious before starting to ease monetary policy while fellow rate-setter Christopher Waller emphasised the need for more inflation data before cutting rates.
Traders currently factor in about 43 basis points of rate reductions this year, with a quarter-point cut fully priced in for November.
“We continue to expect the Fed to deliver the first cut in December … An earlier cut is possible but it likely requires a string of more favourable inflation prints and some softening in labour market data,” Deutsche Bank Research analysts said in a note.
In early trading on Tuesday, the Dow Jones Industrial Average was up 28.67 points, or 0.07 per cent, at 39,835.44, the S&P 500 was down 3.95 points, or 0.07 per cent, at 5,304.18, and the Nasdaq Composite was down 53.51 points, or 0.32 per cent, at 16,741.36.
Palo Alto Networks dropped 5.1 per cent after its fourth-quarter billings forecast disappointed investors.
Lowe’s Cos reversed premarket gains to fall 1.6 per cent. The retailer’s quarterly sales slowed less than forecast.
Macy’s gained 2.1 per cent after the department store operator raised its annual profit forecast, despite posting a bigger-than-expected drop in sales for the first quarter.
Peloton Interactive slumped 13.7 per cent as the fitness equipment maker was looking to refinance its debt to regain its footing amid falling sales.
US-listed shares of Li Auto lost 3.4 per cent after the Chinese firm postponed plans to launch pure electric SUV models to next year.
Declining issues outnumbered advancers by a 1.13-to-1 ratio on the NYSE and by a 1.23-to-1 ratio on the Nasdaq.
The S&P index recorded 19 new 52-week highs and one new low while the Nasdaq recorded 26 new highs and 40 new lows.
The S&P index recorded 19 new 52-week highs and one new low while the Nasdaq recorded 26 new highs and 40 new lows.