Stocks slipped on Wednesday as investors parsed the latest earnings reports and Federal Reserve meeting minutes while awaiting quarterly figures from Nvidia. The Nasdaq Composite slid 0.56% to end at 5,888.55, while the S&P 500 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, an identity management software company, plunged more than 16% after posting a better-than-expected quarter marred by macroeconomic uncertainty. Conversely, shares of Nvidia climbed more than 14%, reflecting investor optimism ahead of its earnings report. “The big drivers of the economy that are keeping it out of a recession and maintaining corporate profits are consumer spending and business investment,” said Tom Hainlin, senior investment strategist at U.S. Bank.
Federal Reserve minutes from its May meeting released Wednesday afternoon showed that participants found a cautious monetary policy approach to be appropriate amid economic uncertainty. They noted that the central bank could face “difficult tradeoffs” if inflation rises. Investors were coming off a strong previous session.
On Tuesday, the Dow rallied more than 700 points, or about 1.8%, while the S&P 500 and Nasdaq Composite advanced 2% and 2.5%, respectively, ending a four-day losing streak. Bank of America clients did not buy the dip during last week’s stock market slump, according to a note from Jill Carey Hall, the firm’s equity and quant strategist. “Last week, clients were net sellers of US equities (-$0.3bn) for the first time in five weeks.
Selling was chiefly in single stocks, while muted ETF inflows were driven by fixed income/other ETFs,” the note stated. On a sector basis, clients sold tech and health care stocks but bought energy stocks. UBS predicts that trade deal volatility will likely curb stock market gains this year.
“Given the U.S. President’s willingness to use forceful rhetoric in trade negotiations, further episodes of volatility are most likely ahead,” the bank wrote in a Tuesday note. However, UBS believes that easing trade tensions could lead to a stock market rally resuming in 2026, with the S&P 500 potentially reaching around 6,400 by June, approximately 8% above Tuesday’s close. Shares of Nvidia rose more than 1% in Wednesday’s session as investors awaited the company’s earnings report coming after the bell.
Nvidia has risen more than 4% so far this week, underscoring the market’s bullish expectations. Federal Housing Finance Agency director William Pulte criticized a recent price increase for credit scores by FICO, claiming it did not have a “legitimate basis.” Pulte indicated that the FHFA was exploring ways to reduce costs, potentially working around FICO. Several stocks made significant moves in Wednesday’s midday trading:
– Abercrombie & Fitch climbed 19% after first-quarter earnings and revenue topped estimates.
– Okta declined more than 14% after its earnings release. – Vail Resorts surged more than 12% after announcing a change in leadership. GameStop tumbled 10% despite initiating a bitcoin buying plan worth more than half a billion dollars.
The move mirrors a similar strategy famously employed by MicroStrategy. The yield on the 30-year Treasury briefly surpassed the closely-watched 5% level on Wednesday, indicating investor concerns about inflation and economic stability. Small cap stocks underperformed on Wednesday, with the Russell 2000 index sliding 0.7%.
In contrast, the S&P 500 ticked 0.2% lower. Honeywell appointed Marc Steinberg from Elliott Investment Management to its board of directors. Steinberg will join as an independent director and audit committee member, effective May 31.
Bank of America raised its price target for Seagate Technology to $135 from $125 following meetings with the company’s CFO. The analyst highlighted strong demand trends from cloud storage and significant opportunities from heat-assisted magnetic recording (HAMR) technology. An upbeat earnings report by Nvidia Corp.
could significantly boost a rally in US equities, according to strategists from BBVA. Institutional positioning in the US technology sector remains cautious. Hedge funds and mutual funds are still substantially underweight, said strategist Michalis Onisiforou.
Exposure of trend-following Commodity Trading Advisors (CTA) to the broader stock market is also neutral, while volatility control funds have ample room to increase their risk exposure, he noted. “With the institutional length in equities far from exuberance levels,” Onisiforou said the setup favors higher exposure to stocks. The S&P 500 had rallied since an April low due to optimism around easing trade tensions but fell last week over worries about the fiscal deficit and a resurgence in tariff tensions.
Investors are now focused on Nvidia’s first-quarter earnings report, set to be released on Wednesday. As a $3.2 trillion company, Nvidia is considered a bellwether for artificial intelligence demand.
nvidia’s strong quarterly earnings boost
Although Nvidia’s shares have rebounded about 40% in the past seven weeks, the stock remains approximately 14% below its January record high. Trading at a price-to-earnings ratio of about 28, it is well below its five-year average valuation of 40, according to data compiled by Bloomberg. However, Onisiforou warned that the recent rally has left the stock near overbought levels, posing a challenging backdrop for the earnings report.
Demand from retail buyers, who have consistently purchased on dips in US stocks this year, briefly weakened before being revived by a debt downgrade from Moody’s Ratings, Onisiforou added. NVIDIA (NASDAQ: NVDA) today reported its financial results for the first quarter ended April 27, 2025. The company achieved revenue of $44.1 billion, marking a 12% increase from the previous quarter and a 69% rise from the same period last year.
Financial Highlights:
– Revenue: $44.1 billion, up 12% from Q4 and up 69% year-over-year. – Data Center Revenue: $39.1 billion, up 10% from Q4 and 73% from last year. – GAAP and non-GAAP Gross Margins: 60.5% and 61.0%, respectively.
Excluding a $4.5 billion charge related to H20 product inventory, non-GAAP gross margin would have been 71.3%. – GAAP and non-GAAP Earnings Per Share: $0.76 and $0.81, respectively. Excluding the H20 charge and related tax impact, non-GAAP EPS would have been $0.96.
On April 9, 2025, NVIDIA was informed that a license is required for exports of its H20 products to China. This led to a $4.5 billion charge in the first quarter for excess inventory and purchase obligations, as demand for H20 diminished. Sales of H20 products were $4.6 billion before the licensing requirements were enforced, and an additional $2.5 billion in H20 revenue could not be shipped in Q1.
“Our breakthrough Blackwell NVL72 AI supercomputer — a ‘thinking machine’ designed for reasoning — is now in full-scale production across system makers and cloud service providers,” said Jensen Huang, founder and CEO of NVIDIA. “Global demand for NVIDIA’s AI infrastructure is incredibly strong. AI inference token generation has surged tenfold in just one year.
As AI agents become mainstream, the demand for AI computing will accelerate. Countries around the world recognize AI as essential infrastructure — just like electricity and the internet — and NVIDIA stands at the center of this profound transformation.”
NVIDIA will pay its next quarterly cash dividend of $0.01 per share on July 3, 2025, to all shareholders of record on June 11, 2025. Outlook for Q2 Fiscal 2026:
– Revenue: Expected to be $45.0 billion, plus or minus 2%.
– Gross Margins: GAAP at 71.8% and non-GAAP at 72.0%, plus or minus 50 basis points. – Operating Expenses: GAAP and non-GAAP operating expenses are anticipated to be approximately $5.7 billion and $4.0 billion, respectively. – Other Income/Expense: Expected to be approximately $450 million.
– Tax Rates: Expected to be 16.5%, plus or minus 1%, excluding any discrete items. Business Highlights:
– Data Center:
– First-quarter revenue was $39.1 billion as NVIDIA continues producing AI supercomputers in the U.S.
– Entered into multiple strategic partnerships to advance AI development globally, including with HUMAIN and G42 in the UAE. – Worked on developing AI factories and supercomputers to speed the transition to enterprise AI infrastructure.
– Gaming:
– First-quarter gaming revenue reached a record $3.8 billion, up 48% from Q4. – Launched new Blackwell graphics options for desktops and laptops. – Announced the upcoming Nintendo Switch 2 with NVIDIA processors for 4K gaming.
– Professional Visualization:
– First-quarter revenue was $509 million, up 19% from last year. – Introduced new series for workstations and servers powered by NVIDIA Grace Blackwell platform. – Enhanced collaboration with industrial software and service providers like Accenture and Siemens.
– Automotive:
– First-quarter automotive revenue was $567 million, marking a 72% increase from a year ago. – Announced partnerships with GM and other companies to integrate NVIDIA systems in next-generation vehicles and robotics. Colette Kress, NVIDIA’s executive vice president and CFO, provided additional insights into the financial results and outlook.
NVIDIA will conduct a conference call with analysts and investors to discuss the first-quarter financial results and prospects today at 2 p.m. Pacific time (5 p.m. Eastern time). A live webcast of the conference call will be accessible at NVIDIA’s investor relations website, and a replay will be available. NVIDIA uses non-GAAP measures to supplement its condensed consolidated financial statements presented in accordance with GAAP.
These measures help investors compare current results with previous periods. For further information, visit NVIDIA’s investor relations website.
