Nasdaq 100 and S&P 500: Nvidia Drags Tech Stocks Lower as Inflation Fuels Fed Speculation

What’s Driving the Market Today?

U.S. stock indexes delivered mixed performances on Wednesday as investors weighed inflation data against sector-specific headwinds. The S&P 500 and Nasdaq slid, pressured by tech losses, while the Dow was marginally lower, supported by healthcare and financial stocks. Inflation data came in as expected, but it remained above the Federal Reserve’s 2% target, leaving traders to speculate on potential rate cuts in December.

Index Performance: How Did Major Benchmarks Fare?

The S&P 500 edged down 0.54%, hampered by a 1.1% decline in its Information Technology sector. Despite the dip, the index is set for its largest one-month gain in a year, with six positive months out of the last seven.

The Nasdaq Composite dropped 1.12%, weighed down by falling mega-cap tech stocks and disappointing earnings from key players in the sector. In contrast, the Dow Jones Industrial Average was off by 0.13% although it was supported by strength in healthcare and financial stocks that capitalized on positive economic data.

Small-cap stocks fared better, with the Russell 2000 climbing 0.7%. The broader market breadth was positive, as advancing issues outnumbered decliners by a 2.88-to-1 ratio on the NYSE and 1.7-to-1 on the Nasdaq.

Sector Highlights: Which Areas Outperformed?

Healthcare was the best-performing sector, rising 0.95% as investors sought stability in the face of macroeconomic uncertainty. Financials also posted solid gains of 0.37%, supported by upbeat third-quarter GDP data and a decline in weekly jobless claims, which signaled ongoing strength in the U.S. labor market.

On the flip side, technology suffered the steepest losses, falling 1.91%. Rising yields on shorter-term Treasury bonds weighed heavily on growth-oriented tech stocks. Dell and HP were among the biggest losers, plunging 10.5% and 10.1%, respectively, following weak earnings guidance. Communication Services also struggled, with the sector declining 0.42%.

Utilities and Real Estate sectors rose 0.43% and 0.97%, respectively, as traders sought yield-focused assets. Energy posted modest gains of 0.36%, underpinned by higher oil prices.

Stock-Specific Moves: Which Companies Stood Out?

Nvidia fell 2.5%, and Microsoft declined 0.6%, adding to the downward pressure on the tech-heavy Nasdaq. Losses in these mega-cap stocks contributed significantly to the overall weakness in the sector.

Workday slumped 9.6% after providing a disappointing fourth-quarter subscription revenue outlook, reflecting soft demand for its business software. Meanwhile, Dell and HP led declines in the hardware segment, following weak forward guidance tied to declining enterprise spending.

On the upside, healthcare stocks like UnitedHealth Group and Johnson & Johnson provided stability for the Dow, while major banks like JPMorgan Chase boosted the financials sector.

Market Forecast: Where Could the Market Be Headed Next?

Market sentiment remains cautiously optimistic, driven by the resilience of defensive and cyclical sectors. However, persistent inflation above the Fed’s target and uncertainty surrounding future rate cuts may cap further gains in the near term.

Tech stocks could face continued headwinds from rising Treasury yields and weaker earnings guidance, but strong labor market data and solid GDP growth are likely to support financials and industrials. Traders should keep a close eye on upcoming economic releases and Federal Reserve communications for further direction. While the broader market maintains a bullish tilt, tech-heavy indexes like the Nasdaq could experience additional short-term pressure.

More Information in our Economic Calendar.