Earnings results from US tech firm Nvidia are being watched closely, as new artificial intelligence advances from China disrupt the market. Photo: AFP/ Beata Zawrzel
All eyes are on California tech Nvidia, whose latest positive earnings results announcement could set the tone for the artificial intelligence sector amid challenges from China.
The S&P 500 ended little changed on Wednesday ahead of the Nvidia quarterly results announcement.
Overall, US stocks lost ground in afternoon trading, with investors digesting the latest comments from US President Donald Trump on tariffs. Trump said on Wednesday his administration will soon announce a 25 percent tariff on imports from the European Union. He also raised hopes for another pause on steep new tariffs on imports from Mexico and Canada by saying they would take effect on 2 April, about a month later than a deadline next week.
After the closing bell, Nvidia's shares were up about 2 percent in choppy trading. The AI tech leader forecast first-quarter revenue above market estimates.
Nvidia's stock ended the regular session up 3.7 percent, while an index of semiconductors was up 2.1 percent on the day.
The launch and popularity of low-cost AI models from China's DeepSeek had rattled the industry in January and raised questions around US companies' heavy investments in the technology.
Any upbeat comments by Nvidia on demand will elevate stocks of companies investing heavily in AI, said Daniel Morgan, portfolio manager at Synovus Trust in Atlanta. "It's become the biggest tech report."
But gains in US technology stocks were offset by losses in US healthcare and other sectors.
A Reuters poll showed strategists had still expected the S&P 500 to finish 2025 about 9 percent above current levels, although predicting that market volatility would persist.
Since last week, a series of data releases, including Tuesday's weak consumer sentiment print, have hinted that the world's largest economy might be stalling despite inflation remaining high, keeping investors on the edge.
Global markets - European stocks hit record as Wall Street flutters, Nvidia earnings in focus
Ahead of the Nvidia earnings results, US stocks wobbled amid fresh tariff threats, while a draft US-Ukraine deal on critical minerals and robust corporate earnings helped European shares close at a record high.
Global shares also gained and benchmark Treasury yields looked set to notch their sixth straight day of declines, while the US dollar rose after House Republicans advanced US President Donald Trump's tax cut plans.
It was speculated that artificial intelligence poster child Nvidia's quarterly earnings report could offer clarity on demand and justify or undercut the sector's lofty valuations.
Investor scepticism has grown, over the billions that US tech firms have channelled into AI infrastructure due to slow payoffs and to breakthroughs at China's DeepSeek.
"Any signs of weakness in Nvidia's report could have outsized effects on investor sentiment towards AI stocks as a whole," said Saxo's global head of investment strategy Jacob Falkencrone, before Nvidia's earnings announcement.
The Republican-controlled US House of Representatives late on Tuesday narrowly passed Trump's $4.5 trillion tax-cut plan, sending the budget resolution to the Senate, where Republicans are expected to take it up.
"It's mainly good for corporate US," said Lars Skovgaard, senior investment strategist at Danske Bank.
"There's expected to be less regulation and tax cuts. I would expect it to happen and then it will be positive for markets if they do so."
US housing data showed the sales of new homes fell sharply in January as persistently high mortgage rates sidelined potential homebuyers.
The data is the latest to hint at dampening consumer demand.
Prior to the Nvidia announcement, the Dow Jones Industrial Average had fallen 165.41 points, or 0.37 percent, to 43,457.58, the S&P 500 fell 3.69 points, or 0.06 percent, to 5,951.60, and the Nasdaq Composite rose 4.39 points, or 0.03 percent, to 19,030.78.
European sentiment had improved after reports that the US and Ukraine agreed terms of a draft minerals deal, sending European shares up for a second straight day to an all-time closing high.
"(The plan) moved through just a little bit quicker than people were expecting," said Tony Sycamore, a market analyst at IG.
Benchmark US Treasury yields reversed earlier gains amid new tariff uncertainties. A part of the US Treasury yield curve that is watched by some analysts as a possible recession indicator inverted for the first time since mid-December as concerns about US economic growth and a more optimistic picture on longer-term debt issuance plans pull longer-dated yields lower. The spread between yields on two-year and five-year US Treasuries briefly traded negative.
Oil prices touched a two-month low after a surprise build-up in US stockpiles and the growing potential for a Ukraine-Russia peace deal weighed on prices.
- Reuters
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