[New York Stock Market] Watching Nvidia Earnings... Nasdaq Falls for Third Consecutive Day

NVIDIA Declines on Valuation Concerns
FOMC Confirms Caution on Early Rate Cuts

The three major indices of the U.S. New York stock market closed mixed on the 21st (local time). The market showed a cautious stance as it digested concerns over the overvaluation of Nvidia shares, which announced earnings after the market close, and the risk of an early interest rate cut reflected in the minutes of the January Federal Open Market Committee (FOMC) meeting.

On that day at the New York Stock Exchange (NYSE), the blue-chip-focused Dow Jones Industrial Average rose 48.44 points (0.13%) from the previous session to close at 38,612.24. The large-cap-focused S&P 500 index closed up 6.29 points (0.13%) at 4,981.8. Both the Dow and S&P 500 had been declining during the session but managed to rebound just before the close. The tech-heavy Nasdaq index fell 49.91 points (0.32%) to 15,580.87, marking its third consecutive day of decline.

Nvidia, which announced earnings after the market close, fell 2.85% during regular trading. The stock dropped amid concerns over a sharp rise in valuation ahead of the Q4 earnings announcement (November last year to January this year).

Quincy Crosby, Chief Global Strategist at LPL Financial, said, "The market is becoming more discerning and greedier," adding, "Nvidia may deliver strong results like in the previous earnings season, but it may not be enough for a market that craves more from its superstars." Alex McGrath, Chief Investment Officer (CIO) at NorthEnd Private Wealth, analyzed, "Investors paid increasingly higher prices for tech stocks amid the tech rally, and this continued until there was no one left to pay more."

Expectations of a delay in interest rate hikes also weighed on the stock market.

The minutes of the January FOMC meeting released that day reaffirmed Fed officials' cautious stance on early rate cuts. The minutes stated, "Most participants noted that moving too quickly to ease monetary policy would be risky," and emphasized, "It is important to carefully evaluate incoming data to determine whether inflation is sustainably declining to 2%." This aligns with the Fed's policy statement after the January FOMC, which called for additional evidence of slowing inflation.

Some members judged that recent improvements in inflation might be temporary. They noted that consumer spending was stronger than expected and warned that if financial conditions become too accommodative in the future, the downward trend in inflation could stall or reverse.

However, no additional rate hikes are expected, as suggested by some on Wall Street. The minutes confirmed that Fed officials believe the current rate of 5.25-5.5% has reached its peak.

By individual stocks, cybersecurity firm Palo Alto Networks fell 28.4% after lowering its annual sales forecast. SolarEdge Technologies dropped 11.8% following a weak Q1 earnings outlook. Amazon rose 0.9% on news that it would replace Walgreens Boots Alliance in the Dow Jones Industrial Average. Walgreens fell 3.2%.

With the Fed's cautious stance on rate hikes reaffirmed, Treasury yields rose compared to the previous trading day. The U.S. 10-year Treasury yield, a global bond yield benchmark, moved up to 4.31%, and the 2-year Treasury yield, sensitive to monetary policy, rose to around 4.66%.

International oil prices rose as the Fed indicated that interest rates have likely peaked. West Texas Intermediate (WTI) crude oil was trading at $77.91 per barrel, up $0.87 (1.13%), and Brent crude rose $0.69 (0.84%) to $83.034 per barrel.