Nvidia was at the forefront of the market recovery after April’s lows, crossing the $4-trillion market capitalization mark in July on global enthusiasm around artificial-intelligence to become the world’s largest corporation.
Traders worry that companies in the S&P 500 technology index – which accounts for about 34% of the S&P 500 – might be overvalued. Valuations of the benchmark index are well above long-term averages, according to data compiled by LSEG.
The concerns weighed on tech stocks last week, after OpenAI CEO Sam Altman spoke of a potential bubble and a study from the Massachusetts Institute of Technology showed AI tools boosted individual productivity, not corporate earnings.
Nvidia climbed 0.2% ahead of results, which are expected after markets close, while the broader tech sector inched up 0.3%. Options traders are pricing in about a $260-billion swing in the company’s market value after the results.
“Nvidia’s strong results will be like Xanax to the market that was concerned over (OpenAI’s Sam) Altman’s comments,” said Eric Schiffer, chief executive officer of the Patriarch Organization, who expects an upbeat report.The impact of the Sino-U.S. trade war on the company’s significant China business earlier this year will be closely watched, along with the effect on forecasts from its recent revenue-sharing deal with the U.S. government.”The China story remains uncertain: Beijing is now pressuring domestic firms to buy local chips, which could erode Nvidia’s Chinese revenue share,” said Ipek Ozkardeskaya, a senior analyst at Swissquote Bank.
At 11:50 a.m. ET, the Dow Jones Industrial Average rose 107.21 points, or 0.24%, to 45,525.28, the S&P 500 gained 14.32 points, or 0.22%, to 6,480.26, and the Nasdaq Composite was up 45.44 points, or 0.21%, to 21,589.71.
Microsoft and Meta, Nvidia’s top customers, as well as semiconductor stocks Broadcom and Advanced Micro Devices, struggled for direction.
Energy led gains among the 11 S&P 500 sectors with a 0.7% rise. The Russell 2000 small-caps index climbed 0.5% and has gained more than 4% since Federal Reserve Chair Jerome Powell’s dovish comments last week.
Markets were also stabilizing following Tuesday’s initial decline, after U.S. President Donald Trump attempted to fire Fed Governor Lisa Cook.
The move is likely to face legal challenges. If successful, it could allow Trump to nominate a dovish-leaning official to the central bank’s board, posing a challenge to the independence of the Fed.
Investors are pricing in a 25-basis-point interest-rate cut in September, according to data compiled by LSEG, with most big brokerages also leaning in that direction.
New York Fed President John Williams said there was a need to stay data-dependent before deciding on a move in September, according to a report.
In stocks, MongoDB jumped 34.3% after the software-maker raised its annual profit forecast.
J.M. Smucker fell 5.1% after the Jif peanut butter maker missed first-quarter profit estimates.
Advancing issues outnumbered decliners by a 1.33-to-1 ratio on the NYSE and by a 1.29-to-1 ratio on the Nasdaq.
The S&P 500 posted 25 new 52-week highs and one new low, while the Nasdaq Composite recorded 106 new highs and 22 new lows.
