Nvidia, a key player in the artificial intelligence sector, closed down 2.3 percent ahead of its earnings report due on Wednesday, which traders are closely monitoring as it could significantly impact the market. Other chip stocks, including Broadcom and Micron, also experienced declines.
Ross Mayfield, a Baird analyst, commented to CNBC, “I think there’s a little angst in the technology sector about the upcoming Nvidia earnings. The market is in a pretty healthy place, but it is really hard to make big advances higher if tech is a laggard — it’s just too big of a weight in the index — and right now, it is acting like a laggard.”
The market started August under pressure due to concerns about a possible recession and the unwinding of a popular hedge fund trade linked to the Japanese yen, which pushed stocks off their record levels.
On August 5, the S&P 500 experienced a 3 percent drop, its largest one-day loss since 2022, and the Dow plunged over 1,000 points, marking its worst sell-off in about two years.
However, expectations of lower Federal Reserve interest rates and improving US economic data have since driven stocks higher. Since August 5, the S&P 500 has surged 8 percent and is now less than 1 percent away from its record high set-in mid-July, while the Dow has risen by over 6 percent.