The tech-heavy Nasdaq ended Wednesday in the red, breaking the day's upward move. The reason was the growing geopolitical tensions between Russia and Ukraine, as well as weak financial results from Target. Investors were anxiously awaiting the release of Nvidia's quarterly results, which, however, fell short of inflated expectations.
The Dow Jones managed to finish the session higher, while the S&P 500 remained virtually unchanged. Meanwhile, morning trading began with a general decline - the news of Ukraine using British Storm Shadow missiles on Russian territory stirred up the markets. This happened immediately after the announcement of the launch of American ATACMS missiles, which prompted Russia to announce a reduction in the nuclear threshold.
The Wall Street VIX volatility index, known as the "fear scale", rose to 18.79, which was a record since November 2020, and then fell to 17.24. Despite the pullback, anxiety in the markets remains high.
"After yesterday's strong rally in the tech sector, today the market switched to a more defensive mode," said James Regan, head of research at D.A. Davidson.
The quarterly earnings report from AI chipmaker Nvidia was the highlight of the evening. The company's shares were down 0.76% during the session and fell further after the close. Despite a fourth-quarter revenue forecast that beat analysts' average estimates, investors were expecting more.
The market, which has seen a strong rally, is once again faced with a choice between risk and caution as global events add uncertainty.
The information technology sector was under pressure, ending the session down 0.23%, which affected overall investor sentiment. The tech-heavy Nasdaq lost 0.11%, showing that confidence in the segment has weakened somewhat.
Target shares plunged 21.4% after the company issued holiday sales and profit guidance that fell short of analysts' expectations. The company's weak third-quarter results added to investor disappointment.
Target's decline also weighed on the consumer discretionary index, which lost 0.57% on the day and was the worst performer in the sector.
Tesla shares fell 1.15% and Amazon lost 0.85%, indicating that investors are taking a cautious approach to growth assets. These companies, which had previously been leaders in their segments, are now facing more subdued expectations.
Among the major indices, the Dow Jones Industrial Average managed to rise 139.53 points (+0.32%), closing at 43,408.47. The S&P 500 showed almost zero dynamics, adding a symbolic 0.13 points, and the Nasdaq Composite fell by 21.32 points (-0.11%) to 18,966.14.
Despite the decline in Nvidia shares during the last session, its annual dynamics remain impressive: since the beginning of the year, the shares have almost tripled their value. According to BofA Global Research, this has brought about 20% of the return of the entire S&P 500 index over the past 12 months.
"Companies are starting to share successful cases of using AI, showing how investments in new technologies bring additional income or help reduce costs," analysts comment. However, investors are cautious, preferring to wait for confirmation of the sustainability of these trends.
The market is entering a new phase where high expectations collide with the reality of results, and geopolitical instability continues to shape sentiment.
MicroStrategy shares soared by 10%, while MARA Holdings showed an even more impressive growth of 13.9%. These companies linked to the cryptocurrency sector received support amid improving investor sentiment and growing interest in digital assets.
Traders have increased expectations that the Federal Reserve will not raise rates at its December meeting. This opinion was formed amid the publication of strong economic data that shows the economy is stable despite persistent inflation.
On the New York Stock Exchange (NYSE), decliners outnumbered gainers by a 1.24-to-1 ratio, with 184 new highs and 94 new lows. On the Nasdaq, the story is similar: 2,245 stocks fell, compared to 2,007 gainers, for a ratio of 1.12-to-1.
The S&P 500 posted 30 new 52-week highs and 13 new lows, while the Nasdaq Composite posted 92 new highs and 163 new lows, underscoring the overall trend of uncertainty in the market.
Total trading volume on U.S. exchanges was 13.2 billion shares, below the 20-day average of 14.32 billion. This indicates some caution among traders in the current market conditions.
On the international stage, stocks showed a moderate decline, as traders continued to take into account the growing geopolitical tensions between Russia and the West.
Meanwhile, Bitcoin set a new record, demonstrating investor confidence in cryptocurrencies. The dollar also strengthened after three days of decline, which became an additional signal of a change in sentiment in the currency markets.
The financial world once again demonstrates a complex interplay of factors, where global events, economic data and central bank actions are intertwined into a complex picture of uncertainty.
The S&P 500 index ended trading virtually unchanged, reflecting neutral investor sentiment. The Dow Jones turned out to be in the green, while the Nasdaq showed a decline, continuing the correction after the recent rally.
Among the leaders of growth, shares of companies from the healthcare, energy and materials sectors stood out. In contrast, consumer staples, financials and technology stocks were weak, becoming the session's main losers.
The MSCI All-World Index, which measures the overall performance of global markets, fell 0.16% to 847.84. European stocks also ended the day lower, although the decline was minimal, down 0.02%.
Investors were watching Nvidia shares closely, which came under some pressure after the release of quarterly results. Despite the decline, the situation was not catastrophic, said James St. Aubyn, chief investment officer at Ocean Park Asset Management.
"Nvidia remains a key player in the market, but expectations are rising each quarter and they are becoming increasingly difficult to meet. We are at that point where high expectations are starting to put pressure," St. Aubyn added.
The session showed that market participants remained cautious, balancing expectations for further growth with concerns related to geopolitics and corporate results. Global stocks reflected the general tension, with investors weighing local and global risk factors.
This week promises to be eventful, and the coming days may provide clearer signals about the direction of markets in the near future.
Gold and government bond prices continued to rise on Tuesday, as markets reacted to the escalation of the conflict between Ukraine and Russia. Such news caused increased demand for safe assets.
Gold prices reached a weekly high, continuing to rise for the third trading session in a row. Spot gold increased by 0.69%, reaching $2,649.89 per ounce. U.S. gold futures showed a similar gain of 0.8%, reaching $2,651.70.
The rise in gold prices reflects investors' appetite for conservative strategies amid global instability.
Also in focus is Donald Trump's choice for Treasury Secretary, which is expected to be announced as early as Wednesday.
"The market is recognizing that some of Trump's policies, such as tariffs and deportations, carry inflation risks," said Lukasz Tomicki, co-founder of LRT Capital in Austin, Texas. Bond yields have risen sharply since the election, confirming market participants' expectations.
The dollar index rose 0.54% to 106.68, snapping a three-day losing streak, although current levels remain below a one-year high.
The dollar also gained against key currencies, up 0.48% against the yen to 155.40 and 0.2% against the Swiss franc to 0.88410. The dollar index has gained nearly 3% since the November 5 election, underscoring confidence in the U.S. economy.
Global markets are on hold: geopolitical tensions, monetary policy and personnel decisions in the US continue to influence asset movements. The latest statements and actions by leaders can radically change the trajectory of investor sentiment.
The Chinese yuan weakened against the dollar after the People's Bank of China decided to leave its base lending rates unchanged, as analysts had predicted. In the offshore market, the yuan lost 0.22%, falling to 7.251 per dollar. Such a decline reflects the general caution of investors in the context of stable monetary policy in China.
The cryptocurrency surprised the markets again, reaching a new record level just below $95,000. During the last session, the price of bitcoin rose by 2.53%, reaching $94,579.01. Bitcoin has risen more than 30% since Donald Trump was elected. Market participants attribute this growth to expectations of more favorable regulation of the cryptocurrency sector under the new administration.
Bitcoin received an additional boost from a Financial Times report that Trump Media and Technology Group, which owns the social network Truth Social, is close to acquiring all shares of the Bakkt cryptocurrency trading platform. This news has increased speculation about Trump's possible influence on the development of digital assets.
Oil prices fell, reflecting excess crude and gasoline inventories in the United States, which turned out to be higher than expected.
Brent crude futures for January delivery fell 0.68%, closing at $72.81 per barrel. WTI contracts for December delivery ended the session down 0.75%, reaching $68.87 per barrel. The more active January WTI contract also showed a decline of 0.71%, closing at $68.75.
Market participants continue to closely monitor news from China, the crypto industry and the commodities sector. The influence of global economic policy and unexpected corporate events, such as a possible deal around Bakkt, create high volatility and intrigue, which creates unique opportunities for investors.
