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Traders work on the floor of the New York Stock Exchange (NYSE) during morning trading in New York on August 23, 2024.
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Nasdaq 100 futures fell Wednesday night after Nvidia — the artificial intelligence bellwether that's up more than 150% this year — posted strong quarterly results that nevertheless failed to live up to investors' lofty expectations.
Nasdaq 100 futures slid about 1%, while S&P 500 futures fell 0.5%. Meanwhile, Dow Jones Industrial Average futures gained 76 points, or 0.2%.
Nvidia shares dropped 6% in extended trading. In its fiscal second quarter, the AI chipmaker exceeded expectations on the top and bottom lines, and issued a rosy current-quarter sales outlook, but failed to impress traders anticipating a stronger beat.
Nvidia
"Death, taxes, and NVDA beats on earnings are three things you can bank on. Here's the issue, the size of the beat this time was much smaller than we've been seeing. Even future guidance was raised, but again not by the tune from previous quarters," wrote Ryan Detrick, chief market strategist at Carson Group.
"This is a great company that is still growing revenue at 122%, but it appears the bar was just set a tad too high this earnings season," Detrick added.
Salesforce shares popped 3% after the business software giant beat fiscal second-quarter estimates on the top and bottom lines, and raised its full-year profit outlook. CrowdStrike also gained 3.5% on the back of an earnings and revenue beat, though it lowered its full-year outlook following the global outage in July.
Wall Street is coming off a losing session after a slump in Nvidia shares ahead of the company's earnings results weighed on the major averages. The tech-heavy Nasdaq Composite dropped 1.12%, while the S&P 500 fell 0.6%. The 30-stock Dow slid about 159 points, or 0.39%.
Those moves highlight the growing significance of Nvidia to the broader market. The semiconductor company, which passed the $3 trillion market cap this year to briefly become the world's most valuable public company, now accounts for roughly 7% of the S&P 500.
Corporate earnings season continues Thursday with some notable consumer names including Dollar General, Ulta Beauty and Lululemon Athletica. Campbell Soup and Best Buy are also on deck.
The July personal consumption expenditures price index is set to release on Friday.
Powersports stocks historically rally after the first rate cut, according to Bank of America
Powersports stocks such as Harley-Davidson and Polaris have a track record of rallying after the first interest rate cut in the cutting cycle, Bank of America said in a note from Wednesday.
"Over the past 7 rate cut cycles, HOG stock has increased 31% on average 12 months after the first cut, while PII has increased 40%, both significantly greater than 12% for the S&P 500," the bank said.
The market has already priced in a rate cut at the FOMC's upcoming September meeting. The CME FedWatch Tool suggests a 63.5% probability of a 25-basis-point rate cut, while the probability of a 50-basis-point cut is around 36.5%.
— Lisa Kailai Han
Stocks making the biggest moves after hours
Check out the companies making headlines in extended trading.
- Nvidia — The artificial intelligence chipmaker dropped 5% even after Nvidia beat expectations in its fiscal second-quarter results. Adjusted earnings per share of 68 cents exceeded the LSEG consensus estimate of 64 cents per share. Revenue of $30.04 billion exceeded the anticipated $28.7 billion. In the current quarter, Nvidia expects about $32.5 billion in revenue, more than the $31.77 billion expected by analysts, according to StreetAccount.
- Salesforce — The software stock advanced 3.5% after Salesforce reported better-than-expected fiscal second-quarter results and raised its full-year profit outlook. Separately, the company said president and CFO Amy Weaver will step down.
- CrowdStrike — Shares popped 3.9% after the cybersecurity company exceeded fiscal second-quarter expectations on the top and bottom lines. CrowdStrike posted adjusted earnings of $1.04 per share, more than the LSEG consensus estimate of 97 cents earnings per share. Revenue of $963.9 million came in above the expected $959 million.
— Sarah Min
English (US)