US stock futures fall, Nvidia sinks after revenue guidance underwhelms

Investing.com-- U.S. stock index futures fell in evening deals on Wednesday, with losses geared towards technology stocks as market darling Nvidia dropped as an underwhelming revenue forecast eclipsed strong earnings. 

Nvidia’s earnings spurred an extension in the flowsout of technology stocks seen in recent weeks, with the prospect of lower interest rates sparking plays into more economically sensitive sectors. This trade also sparked losses during Wednesday’s session, with Wall Street indexes falling from record highs.

S&P 500 Futures fell 0.7% to 5,572.50 points, while Nasdaq 100 Futures fell 1.2% to 19,192.75 points by 19:14 ET (23:14 GMT). Dow Jones Futures steadied at 41,175.0 points. 

Nvidia dips as soft outlook eclipses strong earnings, bumper buyback

Shares of NVIDIA Corporation (NASDAQ:NVDA) fell 7.5% to $116.18 in aftermarket trade, hitting an indicated two-week low.

While the firm clocked a stronger-than-expected profit for the May-July quarter and also announced a $50 billion share buyback, its revenue guidance for the current quarter disappointed investors hoping for better growth, especially after a year of outsized earnings.

Nvidia forecast revenue of $32.5 billion, plus or minus 2%, compared to Reuters estimates of $31.77 billion and Bloomberg estimates of $31.9 billion. Reports from both publications suggested that Nvidia’s forecast had missed the top end of some analyst expectations.

Nvidia's gross margin also missed expectations in the July quarter, as did its margin outlook for the current quarter.

The print sparked concerns that an artificial intelligence-driven boom in earnings was slowing- a trend that was more apparent in earnings from other major technology stocks, released in July. 

Nvidia was sitting on a 150% valuation spike this year on the back of hype over AI. The stock was also close to record highs, making it vulnerable to a heavy degree of profit-taking that had battered the broader tech sector. 

Other major technology stocks fell after Nvidia’s earnings, with chipmakers bearing the brunt of losses. 

Wall Street falls from record highs, PCE data awaited 

Wall Street indexes fell from record highs on Wednesday, as technology stocks were sold off in anticipation of Nvidia’s earnings. 

The S&P 500 fell 0.6% to 5,592.18 points, while the NASDAQ Composite fell 1.1% to 17,552.44 points, and had severely lagged its peers in recent sessions. The Dow Jones Industrial Average fell 0.4% to 41,091.42 points, benefiting from its relatively lower weightage of technology stocks. 

Growing expectations of an interest rate cut in September had buoyed Wall Street indexes in recent sessions, although gains were this time more geared towards economically sensitive sectors. 

PCE price index data- the Federal Reserve’s preferred inflation gauge- is due on Friday and is set to offer more cues on inflation.