Nasdaq 100, Dow Jones, S&P 500 News: Nasdaq Stumbles as Nvidia Plummets

Nasdaq’s Decline Led by Nvidia

The Nasdaq index encountered notable losses on Tuesday, primarily driven by a sharp decline in Nvidia’s stock. The chipmaker’s shares fell over 4%, significantly underperforming against other major stocks, which in turn had a substantial impact on the tech-heavy Nasdaq. This contrasted with the Dow’s performance, where Walmart’s strong showing helped offset some of the losses.

At 16:00 GMT, the tech-heavy Nasdaq is trading 15607.91, down 167.74 or -1.06%. The benchmark S&P 500 Index is at 4978.53, down 27.04 or -0.54% and the blue-chip Dow Jones is trading 38643.33, up 15.34 or +0.04%.

Walmart’s Record High and Market Impact

Walmart stood out with its stock reaching a record high, closing up by 5.9%. This increase came on the heels of an optimistic forecast for fiscal 2025 sales, exceeding Wall Street expectations. Additionally, the company boosted investor confidence by announcing a 9% increase in its annual dividend.

Investor Focus and Market Sentiment

As trading resumed post-holiday, investors shifted their focus to Nvidia’s upcoming earnings report, amidst heightened interest in AI. The decline in Super Micro Computer shares, which fell by an additional 6.2%, reflected a wider cooling in AI-centric investments. This trend was further influenced by recent U.S. inflation data, which moderated expectations for the Federal Reserve’s quick start to an easing cycle.

Broader Stock Market Movements

The stock market saw diverse movements: Vizio surged 15.1% after Walmart’s acquisition announcement; Home Depot fell 1.3% due to a subdued sales forecast; Discover Financial Services jumped 10.8% on acquisition news by Capital One. Intel and GlobalFoundries also gained, buoyed by news of government subsidies.

Short-Term Forecast

In the short term, Nvidia’s outlook leans toward bearish as the market awaits its earnings amidst AI market apprehension. Walmart’s forecast appears somewhat bullish, bolstered by strong sales forecasts and dividend growth. The Federal Reserve’s policy stance remains neutral, with the market seeking direction on interest rates. The broader tech sector’s sentiment is neutral-to-bearish, reflective of Nvidia’s performance and overall economic indicators. For the Nasdaq, short-term expectations are leaning toward bearish, influenced by Nvidia’s downturn and prevailing uncertainties in tech sector earnings.

Technical Analysis

E-mini Nasdaq-100 Index futures are down sharply on Tuesday. The selling pressure has driven the index below last week’s low which is a significant development. This hasn’t happened since January 2.

The move represents a major shift in investor sentiment, thereby putting the uptrending 50-day moving average at 17186.12 on the radar.

It’s too early to tell if this will develop into something more than a short-term correction, but it should be noted because it exposes just how much one stock like Nvidia can have on an entire index.

Right now, we’re pretty convinced that the 50-day MA is the target. We expect to see a technical bounce on the first test of this level, but we’ll also be watching for any failure at this MA since this can lead to an even more significant break into the 200-day moving average at 15856.95.