Tech Stocks Pull Wall Street Lower

NEW YORK (AP) -- Technology stocks led Wall Street broadly lower as chipmaker Nvidia pulled back ahead of its earnings report this week. The S&P 500 fell 0.6% Tuesday. The benchmark index is coming off only its second losing week in the last 16. The Nasdaq composite gave up 0.9% and the Dow lost 0.2%. Nvidia, which has ridden a wave of investor enthusiasm over artificial intelligence, lost 4.4%. The stock has more than tripled over the past year. Walmart rose 3.2% after reporting stronger-than-expected results for its latest quarter and issuing sales forecasts that came in ahead of what Wall Street was expecting.

THIS IS A BREAKING NEWS UPDATE. AP's earlier story follows below.

NEW YORK (AP) -- Stocks fell on Wall Street in afternoon trading Tuesday to kick off a holiday-shortened week.

The S&P 500 slipped 0.6% and is coming off only its second losing week in the last 16. The losses pushed the benchmark index further below the record it set last week.

The Dow Jones Industrial Average fell 38 points, or 0.1%, as of 2:54 p.m. Eastern time. The Nasdaq composite fell 1.1%.

Markets were closed in the U.S. on Monday for Presidents Day.

Technology stocks were among the biggest weights on the market. Chipmaker Nvidia slumped 4.7% and Microsoft fell 0.6%.

Big retailers reported mixed earnings. Walmart rose 3.5% after reporting stronger-than-expected results for its latest quarter and issuing sales forecasts that came in ahead of what Wall Street was expecting.

Home improvement retailer Home Depot wavered between small gains and losses. It beat Wall Street's earnings forecasts, but gave investors a disappointing profit forecast for the year.

Outside of earnings, credit card company Capital One Financial rose 0.2% as it moves ahead with a $35 billion buyout of Discover Financial Services. Discover soared 12.9% for the biggest gain in the S&P 500.

Markets are coming off of a heavy week of economic reports that hinted at stubborn inflation squeezing consumer spending. That has pushed expectations for the Federal Reserve to start cutting interest rates further out into 2024. The central bank on Wednesday will release minutes from its latest meeting, potentially giving investors more insight into its next move.

The central bank held interest rates steady at its last meeting in late January and investors had been hoping for rate cuts as soon as March. Those hopes were dashed by the Fed's comments and the latest batch of economic data. Wall Street is now betting on a possible rate cut in May and a likely rate cut in June, according to CME's FedWatch Tool.

Those lowered expectations for interest rate cuts and renewed worries about inflation have essentially tripped up the broader market.

"The narrative that drove us to these levels is very much being called into question," said Sameer Samana, senior global market strategist at Wells Fargo Investment Institute.

Bond yields fell. The yield on the 10-year Treasury slipped to 4.25% from 4.28% late Friday. The yield on the two-year Treasury fell to 4.58% from 4.65%.

Markets in Europe were mixed and markets in Asia were mostly higher.

China's central bank kept its 1-year loan prime rate unchanged on Tuesday but cut its 5-year rate by 25 basis points to 3.95%. That came as a surprise, the first time the five-year rate was cut since May 2023.

Investors have a relatively light week of economic updates ahead, with the latest data on home sales expected Thursday. The broader housing market remains tight, with demand still outpacing supplies. Mortgage rates also remain high, though they have been easing from their most recent peak in late October, when the average rate on a 30-year mortgage hit 7.79%.

Companies from a broad range of industries will report their latest earnings this week. Chipmaking giant Nvidia will release its results on Wednesday along with online crafts marketplace Etsy. Online travel company Booking Holdings reports Thursday. The latest batch of results might give investors a clearer idea of the economy's path ahead.

More than 80% of companies in the S&P 500 have reported their latest results. Analysts polled by FactSet expect overall earnings growth of about 3.3% for the fourth quarter and are forecast earnings growth of about 3.6% for the current quarter.

Wall Street will have to wait until the end of February for another key update on inflation, when the government releases its monthly personal consumption and expenses report, which is the Fed's preferred measure.

"The key question to answer now is whether inflation is bottoming out, and if it is, does it go sideways or back up," Samana said.


Business writers Yuri Kageyama and Matt Ott contributed to this report.