S&P 500 and Nasdaq close lower on Tuesday, dragged down by Nvidia: Live updates

S&P 500 and Nasdaq close lower on Tuesday, dragged down by Nvidia: Live updates

Traders work on the floor at the New York Stock Exchange (NYSE) in New York City, U.S., February 7, 2024. 

Brendan Mcdermid | Reuters

Stocks fell Tuesday as Nvidia led a broader tech decline ahead of the chipmaker’s earnings report.

The Dow Jones Industrial Average dipped 64.19 points, or 0.17%. The S&P 500 slipped 0.60%. The tech-heavy Nasdaq Composite lost 0.92%.

Shares of Nvidia, which is set to report earnings Wednesday after the bell, fell 4.4%. Although Nvidia is expected to post impressive results, investors have expressed concerns about its sky-high valuation. Amazon shares declined 1.4%, while shares of Microsoft and Meta each lost about 0.3%.

“With technology now trading at close to 30x forward estimates, that seems to be a ceiling for the tech sector. Makes it pretty hard for additional PE multiple expansion,” said Sam Stovall, chief investment strategist at CFRA Research. “What investors have to wait on is for earnings to come in better-than-anticipated so that the 2024 and 2025 estimates end up being improved.”

So far this year, the technology sector has added 6%, making it the third-highest gainer in the broader market, losing to communication services and health care. Nvidia has continued its blockbuster stretch of gains, adding 40% so far this year, while its ‘Magnificent 7’ peers have gained Meta and Amazon have advanced about 33% and 10%, respectively.

Financial stocks were also in view Tuesday following a blockbuster announcement that Capital One Financial agreed to purchase Discover Financial Services in an all-stock deal worth $35.3 billion, which is expected to close in late 2024 or early 2025. Capital One added less than 1% following the announcement, while Discover jumped 12.6%.

In separate deal news, Walmart announced it will acquire TV maker Vizio for $2.3 billion, or $11.50 a share, leading shares of Vizio to climb higher by about 16%. Walmart shares added more than 3% after the big-box retailer also beat quarterly earnings and revenue expectations, fueled by double-digit growth in the company’s global e-commerce sales.

The moves follow a losing week on Wall Street after economic data raised concerns that the Federal Reserve may not begin cutting interest rates as soon, or by as much, as market participants expected this year.

Tuesday kicks off the shortened trading week after U.S. markets were closed Monday in observance of the birthday of George Washington.