US Stocks Slide as Investors Anticipate Nvidia Earnings Report

US stock markets experienced significant declines on November 17, 2023, as investors reacted to a flurry of economic data releases following the recent end of the longest government shutdown in US history. Benchmark Treasury yields also fell slightly as market participants shifted their focus to upcoming earnings from prominent companies, particularly Nvidia.

The major US stock indexes all closed sharply lower. The Dow Jones Industrial Average dropped 557.24 points, or 1.18%, finishing the day at 46,590.24. The S&P 500 fell 61.72 points, or 0.92%, to close at 6,672.39, while the Nasdaq Composite decreased 192.51 points, or 0.84%, ending at 22,708.08.

Investors are particularly focused on Nvidia’s quarterly earnings report scheduled for November 19, 2023. As a key player in the artificial intelligence sector, Nvidia’s results are expected to provide insights into demand trends that have significantly influenced the stock market’s performance in recent months. “I think we’re seeing some follow-through on last week’s pullback, particularly in the tech sector focusing on the AI trade,” said Matthew Keator, managing partner at the Keator Group. He emphasized concerns regarding whether current valuations justify stock prices, especially in light of employment figures related to the AI sector.

The economic landscape has shifted following lawmakers’ agreement to end the government shutdown, which had delayed the release of key economic data. Analysts anticipate a busy week for economic indicators, including the Labor Department’s report on September employment scheduled for November 21, 2023. This data is critical, particularly as it pertains to expectations surrounding the Federal Reserve’s potential interest rate decisions.

“There’s a great deal of uncertainty about what to expect from several months of data,” noted Tim Ghriskey, senior portfolio strategist at Ingalls & Snyder. He indicated that the upcoming weeks will be crucial for understanding the economic trajectory.

As the third-quarter earnings season winds down, over 90% of the companies in the S&P 500 have reported their results, with 83% exceeding consensus expectations, according to data from LSEG. Besides Nvidia, major retailers such as Home Depot, Target, and Walmart are also expected to provide insights into consumer demand, which could further influence market sentiment.

In the bond market, Treasury yields declined amid growing concerns about AI sector growth. The yield on benchmark US 10-year notes fell by 1.3 basis points to 4.135%, down from 4.148% late on the previous Friday. The yield on the 30-year bond decreased by 1.1 basis points to 4.7348%, while the yield on the 2-year note fell by 0.6 basis points to 3.608%.

With the market awaiting pivotal earnings reports and economic data, investors remain on edge, navigating the complexities of a rapidly changing economic environment.