S&P 500 and Dow Jones industrials saw marginal gains Wednesday, with Nasdaq closing lower for 3rd straight session as investors focus on Nvidia’s earnings. This earnings report might determine near-term momentum for the overall equity market in the US.
Federal Reserve rate cut hopes
While investors also give some weightage to Federal Reserve rate cut hopes, Nvidia shares went up by ~6% after the closing bell post expecting that its first-quarter revenue should exceed estimates due to strong demand for chips which dominate market for artificial intelligence (AI). During Wednesday’s trading session, Nvidia’s shares saw a decline of ~2.85%, adding to prior day’s decline of over ~4% for the company.
Nvidia shares went up by ~40% in 2024, which makes it a biggest gainer on S&P 500. These gains came after ~240% gain which was seen in 2023. Analysts are still on their toes as they believe that its high valuation might make the stock vulnerable to significant decline if the company fails to deliver expected results.
S&P 500 saw an increase of ~0.13% to close the session at ~4,981.80 points and Nasdaq fell ~0.32% to ~15,580.87 points. Finally, Dow Jones Industrial Average increased by ~0.13% to ~38,612.24 points.
Minutes from the US Fed’s January meeting exhibited that Federal Reserve rate cut hopes have somewhat diminished as there is some uncertainty how long borrowing costs need to be at current level.
2024 equity rally was somehow impacted last week post the data regarding the inflation, which raised concerns that the US Fed might not reduce rates as soon as it is being expected. January inflation data provided uncertainty regarding the Federal Reserve rate cut hopes.
Stock of Palo Alto Networks saw a significant decline of ~28.44% after it forecasts 3Q billings below analyst estimates.
Indian equity markets ended 6-day winning streak
Indian equity markets ended their 6-day winning streak on February 21 as the frontline indexes closed lower. By close, Sensex witnessed a fall of ~434.31 points or 0.59% to close at ~72,623.09, and Nifty was down by ~142.00 points or 0.64% at ~22,055 levels. Gold prices saw an increase on Wednesday as the yellow metal saw some support from escalating conflict in Middle East.
Steep fall in the Indian equity market was mainly because of selling triggered by profit booking and mixed global factors. In 30-share pack, ~20 stocks closed the session in red, with 37 stocks of the Nifty constituents ending with losses.
NTPC was biggest decliner among Sensex constituents, closing with decline of ~2.71%. This was followed by PowerGrid, Wipro, etc. In comparison, shares of Tata Steel, SBI and JSW Steel ended higher. Brent crude futures saw a decline of ~0.68% to end at $81.78 per barrel.
Basically, Indian market continues to face stiff resistance at the current higher levels, with valuation of indexes at significant premium. This has led to an unfavourable risk reward, prompting investors to book profits.