Traders work on the floor at the New York Stock Exchange on Feb. 7, 2024.
Brendan Mcdermid | Reuters
U.S. stock futures ticked down Tuesday night after the major averages incurred a second day of losses, fueled by a decline in Nvidia.
Nasdaq 100 futures shed 0.4%. Futures tied to the Dow Jones Industrial Average slipped 62 points, or 0.16%. S&P 500 futures declined 0.21%.
In after-hours action, Palo Alto Networks shed 20% after the cybersecurity company cut its full-year revenue guidance. SolarEdge Technologies lost more than 10%, dropping on weak first-quarter guidance.
During the regular session, the three major averages slid, dragged lower by tech. The Nasdaq Composite lost 0.92%, while the S&P 500 fell 0.6%. The 30-stock Dow fell 0.17%.
A slump in Nvidia â which slid more than 4% â weighed on the Nasdaq and S&P 500 as sentiment soured the day before the chip giant is expected to post its quarterly results.
Concerns surrounding Nvidia’s high valuation have grown leading up to the company’s earnings announcement, slated for Wednesday after the bell. The stock has soared about 225% over the past year.
The broader tech sector is now overvalued, according to Alex McGrath, chief investment officer at NorthEnd Private Wealth. He thinks Tuesday’s sell-off of Nvidia and other big tech names could mean investors are coming to terms with “the greater fool theory” â that is, when overvalued assets continue to rise because there are enough investors willing to pay more, until there aren’t any more left.Â
“People continued to pay higher and higher prices for the tech sector throughout [the rally]. It had to have been a core asset allocation, but as you get longer and longer into this, the biggest question is: When do you start to trim?” McGrath said. “And with the Nvidia action today, I think that’s what you’re seeing.”Â
On Wednesday, Wall Street will also have an eye out for the minutes from the Federal Reserve’s January meeting, seeking further insight on where the central bank stands on rates. This comes on the back of hotter-than-expected economic data the previous week.Â
Other companies slated to announce their quarterly results Wednesday include HSBC, Wingstop and Analog Devices before the bell. In addition to Nvidia, Etsy will also report its results in the afternoon.Â