The Stock Market Stalls as Traders Watch Nvidia's Earnings and the Fed's Minutes

The morning of Tuesday witnesses a decline in U.S. stocks, marking a pause in the November rally due to varied retailer earnings. Investors are eagerly anticipating the results from AI chipmaker Nvidia and seeking further insights into the Federal Reserve's perspective.

‍

As the trading day unfolds, the Dow Jones Industrial Average (DJIA) experiences a 0.3% decrease, equivalent to a 92-point fall, bringing the index to 35,055. Simultaneously, the S&P 500 (SPX) sees a 0.4% dip, translating to a 17-point decline, resting at 4,530. The Nasdaq Composite (COMP) follows suit with a 0.9% drop, shedding 121 points to settle at 14,163. In contrast, the previous day saw the DJIA rising by 204 points (0.58%) to 35,151, the SPX gaining 33 points (0.74%) to 4,547, and the COMP increasing by 159 points (1.13%) to 14,285.

‍

Market movements are influenced by various factors. Traders adopt a cautious approach in light of impending results from AI chipmaker Nvidia and analyze retail earnings to gauge consumer spending trends heading into the holiday season. The S&P 500, Wall Street's benchmark, stands near four-month highs, having advanced in 14 of the last 16 sessions. November's gains amount to 8.4%, contributing to a 2023 cumulative advance of 18.4%. The benchmark's five-day winning streak is now at risk with the lower start on Tuesday.

‍

The prevailing optimism in the market stems from the belief that the Federal Reserve has concluded its interest rate hikes, leading to a significant decline in bond yields in recent weeks. Investors eagerly await the release of the minutes from the Fed's November 1 policy meeting at 2 p.m., offering insights into the central bank's recent deliberations.

‍

The Nasdaq 100, dominated by technology stocks, has spearheaded the market with an impressive 46.5% surge in 2023, approaching the record high set two years ago. Traders closely monitor Nvidia, the index's fourth-largest constituent, as its results, scheduled for release after Tuesday's closing bell, could significantly impact market dynamics.

‍

Deutsche Bank strategist Jim Reid emphasizes the growing importance of Nvidia's results, citing the company's Q1 earnings in May, which spurred significant market momentum. Options trading signals the possibility of an 8% swing, either positive or negative, in Nvidia shares post-earnings, reflecting the uncertainty surrounding the outcome.

‍

Companies such as Best Buy Co. Inc., Kohl's Corp., and Dick's Sporting Goods Inc. share their earnings reports on Tuesday morning, presenting a mixed picture of strength and pockets of softness. Moody's Investors Service notes a decline in consumer spending momentum, a factor expected to weigh on holiday sales, projecting modest growth of 1%-3%, compared to last year's 5.1% sales increase.

‍

In economic news, existing-home sales declined by 4.1% in October to a seasonally adjusted annual rate of 3.79 million, with a 14.6% decrease from the previous year. This data, released by the National Association of Realtors, falls short of economists' projections.

‍

As the market eagerly awaits Nvidia's results, it's important to note that U.S. markets will be closed on Thursday for Thanksgiving Day, with early closures on Friday for both stock and bond markets. The outcome of Nvidia's earnings and the subsequent market response will likely play a crucial role in shaping investor sentiment as the week progresses.