S&P500: Tech Stocks Pressure Markets as Nvidia Beat Fails to Shift Sentiment

Broad Market Pulls Back Despite Nvidia Beat

The major U.S. stock indexes are under pressure after the opening on Thursday, despite Nvidia posting an impressive earnings beat. After initially rising after the close on Wednesday, Nvidia shares are now down roughly 5%, putting the stock on pace for its worst day since April. The broader market followed Nvidia’s price action indicating that traders who had priced in a positive report were now looking for an opportunity to sell.

Chip Sector Takes the Hardest Hit

Semiconductor stocks were among the biggest losers on Thursday. The price action suggests investors are worried about the AI spending boom and whether it can translate into sustainable revenue growth. In my opinion, the selloff seems to suggest that current valuations in the chip sector require something more than an earnings beat to justify their current valuation. Broadcom, Lam Research, Western Digital, and Applied Materials all fell by more than 6% in sympathy with Nvidia’s decline.

Salesforce Beats but Weak Guidance Caps the Move

Conversely, Salesforce shares increased 2% after beating both revenue and net income expectations; however, their guidance for fiscal 2027 revenues did not support any further price increases. The iShares Expanded Tech-Software ETF (IGV) was up over 1% during the day but is still down nearly 30% from its peak, which indicates a continuing bear market. The software sector continues to experience significant levels of anxiety over the potential for AI disruption despite occasional signs of strength.

Nutanix, IonQ and Smucker Buck the Trend

While most stocks were declining on Thursday, some went in the opposite direction. Nutanix surged 19% after announcing a multiyear AI infrastructure partnership with AMD, which included a $150 million strategic investment. IonQ jumped 12% after announcing strong revenue guidance that nearly doubled analyst expectations. J.M. Smucker popped 7% after beating fiscal third-quarter consensus estimates on both sales and earnings per share, indicating that defensive food stocks still have a place in a weak market.

C3.ai, Trade Desk and Warby Parker Disappoint

C3.ai was the session’s biggest loser, dropping 24% after posting a bigger than expected loss and revenues that came in well below the $76 million consensus. Trade Desk wasn’t far behind, dropping 16% after first-quarter EBITDA guidance of $195 million came up well short of the $223 million estimate. Warby Parker fell 8%. The common thread was forward guidance that fell short of expectations.

SPX Straddles 50-Day Moving Average Again

Technically, the S&P 500 Index (SPX) is straddling the 50-day moving average at 6898.35 as it tries to reestablish support at this key trend indicator. Trader reaction to the moving average will set the tone today.https://www.fxempire.com/tools/economic-calendar

Recapturing the 50-day MA could fuel a strong rebound rally with 6952.51 a potential breakout target. The break through this indicator sent the market into a pivot at 6864.00. If it fails later today, prices could revisit this week’s low at 6815.43.

More Information in our Economic Calendar