Traders on the floor of the New York Stock Exchange on May 6, 2022.
Source: NYSE
The Nasdaq Composite fell on Tuesday, dragged by declines in major tech names such as Nvidia, with Wall Street turning its eyes to Washington as the Federal Reserve kicked off its two-day policy meeting.
The S&P 500 added about 0.1%, while the tech-heavy Nasdaq lost 0.4%. The Dow Jones Industrial Average added 220 points, or about 0.6%.
Chip darling Nvidia pulled back 1.5% as investors evaluated the news from its first-ever GTC Conference. CEO Jensen Huang unveiled Nvidia’s latest AI chip, labeled Blackwell, which he touted as a significantly more powerful successor to its chips that power a multitude of AI operations. The stock had rallied more than 78% year to date heading into the event, possibly enticing investors to book some profits following the news.
Super Micro Computer, a primary vendor for building out Nvidia’s AI servers, dropped more than 10.5% on news of a share offering. Shares have ripped more than 250% higher this year on AI enthusiasm, leading the stock to be added to the S&P 500 on Monday.
In another sign that the recent bull run could be slowing down, bitcoin proxy MicroStrategy dropped more than 11.5%. The stock had more than doubled in 2024 as bitcoin surged to record highs.
According to Sam Stovall, chief investment strategist at CFRA Research, a “healthy” market digestion after the recent market rally will either happen later than investors expect or be deeper than they anticipate.
“The AI revolution has a long way to go, and therefore whatever decline we’re seeing now is certainly not getting on the end, but rather simply some minor digestion of recent gains,” Stovall said, adding that traders could be “taking profits based on the known in reaction to the unknown.”
Tuesday’s moves took place as Wall Street awaited the latest Fed decision on interest rates. The central bank is expected to keep rates unchanged Wednesday. However, a recent slate of worrying inflation reports has investors concerned that the central bank could signal interest rates will remain higher for longer than expected. However, fed funds futures currently forecast a 99% likelihood that the Fed will leave benchmark interest rates unchanged this week, according to the CME FedWatch Tool.