Stocks on Wall Street closed lower Wednesday as a pullback in big technology companies outweighed gains elsewhere in the market. The S&P 500 fell 0.6%, with drops in Nvidia, Apple, Microsoft, and Amazon weighing it down. The Dow Jones Industrial Average also fell 0.4%, while the Nasdaq composite closed 1.1% lower. Nvidia, whose chips power AI applications, reported its second-quarter results, beating forecasts but still experiencing a stock decline. The chipmaker, along with other companies involved in artificial intelligence, has been responsible for much of the market’s gains over the past year.
The market pullback also came in response to news about Super Micro Computer, a server technology company tied to AI. Its stock sank 19.1% after delaying the filing of its annual report, causing unease among investors due to its connection to the AI theme. Other companies, such as Nordstrom and Kohl’s, reported mixed earnings with the former beating expectations and raising its financial forecasts while the latter also exceeded expectations. However, companies like PVH and J.M. Smucker experienced declines after providing revenue forecasts short of analysts’ expectations.
The S&P 500, Dow, and Nasdaq all saw declines by the end of trading. Investors are closely watching consumer spending as inflation and high borrowing rates continue to squeeze the economy. The upcoming release of the latest data on inflation with the PCE report for July will provide insight into how consumers are managing their spending habits. Economists expect inflation to have edged up in July but remain hopeful that the data shows a slowdown, allowing the Fed to proceed with interest rate cuts as planned.
Traders are anticipating interest rate cuts by the Fed at its next meeting in September, following reports showing a strong economy. The steady decline in inflation towards the Fed’s target of 2% has given them confidence in the central bank’s ability to manage inflation without stalling the economy. Despite fluctuating Treasury yields in the bond market, investor Warren Buffett’s Berkshire Hathaway made headlines by unloading more Bank of America stock. Berkshire’s Class A shares gained ground, elevating the conglomerate into the trillion-dollar company club.
In global markets, Europe saw mostly lower while Asia was mixed. The ongoing trend of technology companies driving market gains and the influence of artificial intelligence on various sectors continue to shape investors’ strategies. The performance of key companies like Nvidia and Super Micro Computer underscore the impact of technology on financial markets. As economic indicators remain positive, investors are navigating the volatility while keeping a close eye on inflation data and the Fed’s upcoming decisions. The market’s response to earnings reports and corporate developments reflects the ongoing shifts in sectors like retail and technology that shape Wall Street’s landscape.
