Stocks ticked higher Tuesday, with the S&P 500 and the Nasdaq Composite closing at new records, as investors looked toward artificial intelligence favorite Nvidia’s earnings report Wednesday.
The tech-heavy Nasdaq Composite rose 0.22% to 16,832.62. The S&P 500 added 0.25% to 5,321.41. The Dow Jones Industrial Average closed 0.17% higher at 39,872.99.
Nvidia shares advanced 0.6% prior to its earnings report due Wednesday after the close. Analysts are expecting the semiconductor giant to post another strong batch of results. Shares have surged about 92% in 2024 alone, and have soared 205.1% over the past 12 months. The stock has been at the center of a market rally largely led by enthusiasm that AI will boost corporate profits.
Investor positioning in Nvidia shares is currently very heavy, noted Matt Rowe, head of cross asset strategies at Nomura Capital Management. “People don’t [want] to miss out on participating on the print if they come out with good numbers.”
“But the flip side of the coin is if it’s not exciting, and there isn’t sort of constructive feedback that supports the idea of continued expansion, then this could get sold off very hard, very quickly,” Rowe said.
Options traders are pricing in that Nvidia shares will swing as much as 9% up or down in reaction to the chipmaker’s latest earnings.
Palo Alto Networks shares fell 3.7% Tuesday. While beating expectations for both lines in the fiscal third quarter, the cybersecurity company delivered current-quarter guidance that was only in line with consensus forecasts of analysts polled by LSEG.
Those moves come after a mixed day on Wall Street. The Nasdaq notched intraday and closing records, while the Dow fell on the back of steep declines in JPMorgan Chase
shares.
Traders are now turning their attention to commentary from Federal Reserve officials. Central bank Governor Christopher Waller said he wants to see “several months” of supportive inflation data before lowering rates.
The market has “brushed off” several components of inflation amid some worrying consumer data points, according to Rowe.
“On the volatility side of things, the market is pricing zero disruption as if it’s almost guaranteed that the market is going to continue to move up slowly, but higher nonetheless. And it looks like an all-clear,” Rowe said. However, he added, “The markets [are] priced for perfection in an imperfect world. And there are a lot of things going on out there that could disrupt this quiet story.”
