Stocks slipped on Wednesday as investors parsed the latest earnings reports and Federal Reserve meeting minutes while awaiting quarterly figures from Nvidia. The S&P 500 slid 0.56% to end at 5,888.55, while the NASDAQ Composite shed 0.51% and settled at 19,100.94. The Dow Jones Industrial Average fell 244.95 points, or 0.58%, closing at 42,098.70.
Shares of Okta plunged more than 16% due to macroeconomic uncertainty despite a better-than-expected quarter. On the other hand, Abercrombie & Fitch climbed more than 14% following strong earnings, whereas Nvidia shares closed marginally lower ahead of the much-anticipated earnings report. “The big drivers of the economy that’s kind of keeping it out of a recession and keeping corporate profits positive are consumer spending and business investment,” said Tom Hainlin, senior investment strategist at U.S. Bank.
“Nvidia is a key indicator of whether businesses are accelerating their investments.”
The Federal Reserve released the minutes from its May meeting on Wednesday afternoon, showing that participants found a cautious monetary policy approach appropriate amid a period of economic uncertainty. They also indicated that the central bank could face “difficult tradeoffs” if inflation rises. Despite these revelations, stocks saw little movement following the release.
Bank of America clients were net sellers of U.S. equities for the first time in five weeks during the recent stock market slump. “Clients were net sellers of US equities (-$0.3bn) for the first time in five weeks,” noted Jill Carey Hall, the firm’s equity and quant strategist. Selling was primarily in single stocks, while equity ETFs saw outflows for the first time in six weeks.
Trade deal volatility will likely be the market theme this year, limiting upside for the stock market, according to UBS. “Given the U.S. President’s willingness to use forceful rhetoric in trade negotiations, further episodes of volatility most likely lie ahead,” UBS wrote in a note. The bank believes that while gains may be limited this year, the equity market rally could resume into 2026 with the S&P 500 reaching around 6,400 by June.
Shares of Nvidia rose more than 1% in Wednesday’s session as investors awaited the technology titan’s earnings report. Nvidia has risen more than 4% so far this week, and investors are keen to see details that might indicate trends in the artificial intelligence chip market. Shares of Abercrombie & Fitch climbed 19% after first-quarter earnings and revenue topped Street estimates, led by results at Hollister.
Investors overlooked a cut in the company’s operating margin forecast, which was adjusted due to anticipated impacts from tariffs. GameStop shares tumbled 10% on Wednesday after it announced plans for a significant bitcoin purchase, amounting to over half a billion dollars.
Nvidia’s anticipated earnings report release
The purchase followed a strategy similar to that of MicroStrategy. Despite this move, shares saw a steep decline amidst volatile trading. The yield on the 30-year Treasury surpassed the closely followed 5% level on Wednesday, drawing significant attention from bond market participants.
Honeywell has appointed Marc Steinberg of Elliott Investment Management to its board of directors, effective May 31. Steinberg will join as an independent director and audit committee member, following Elliott’s sizeable investment in Honeywell last year. Bank of America raised its price objective for Seagate Technology to $135, up from $125, after a series of meetings with the company’s CFO, Gianluca Romano.
Analyst Wamsi Mohan cited secular demand trends from cloud storage and opportunities from heat-assisted magnetic recording (HAMR) technology as key factors. An upbeat earnings report by Nvidia Corp. could signal a strong rally in US equities, as investors currently have substantial amounts parked in cash funds, according to BBVA strategists.
Institutional positioning in the US technology sector is currently “undemanding,” with hedge funds and mutual funds still substantially underweight, strategist Michalis Onisiforou noted. Exposure of trend-following Commodity Trading Advisors (CTA) to the broader stock market is also neutral, allowing for further risk additions by volatility control funds. “With the institutional length in equities far from exuberance levels,” Onisiforou stated, the setup favors higher exposure to stocks.
The S&P 500 had rallied since reaching a low in April, driven by optimism around easing trade tensions. However, the gauge fell last week due to concerns about the fiscal deficit and renewed tariff tensions. Investors are now focused on Nvidia’s first-quarter earnings report, due Wednesday.
The $3.2 trillion company is regarded as a key indicator of artificial intelligence demand. Nvidia’s shares have rebounded about 40% in the past seven weeks but remain approximately 14% below their January record high. The stock’s price-to-earnings ratio is about 28, well below its five-year average valuation of 40, according to data compiled by Bloomberg.
Onisiforou cautioned that the recent rally has left Nvidia’s stock near overbought levels, suggesting a challenging backdrop for the upcoming earnings report. Demand from retail buyers, who consistently bought dips in US stocks this year, briefly weakened but was revived following a debt downgrade by Moody’s Ratings, Onisiforou added.
