By Abigail Summerville and Lisa Pauline Mattackal
(Reuters) -Wall Street’s main indexes dipped on Wednesday, taking a break from the prior session’s rally as investors worried about escalation of Russia-Ukraine tensions and weak results from Target (NYSE:TGT), while awaiting earnings from megacap Nvidia (NASDAQ:NVDA).
Stocks fell after a report said Ukraine fired long-range British Storm Shadow missiles into Russian territory. On Tuesday, Ukraine launched U.S.-made ATACMS missiles into Russia, and Russia announced it had lowered the threshold for nuclear action.
Wall Street’s “fear gauge” jumped to 18.79 before easing to 18.04, still at its highest since the Nov. 5 U.S. presidential election.
“It’s gotten a little more defensive today after a strong rally yesterday from growth stocks and the tech sector,” said James Regan, Director of Wealth Management Research at D.A. Davidson
“Maybe there’s a conservative view ahead of Nvidia earnings or a broader reaction from Target’s earnings which is a consumer bellwether. There are also more geopolitical concerns with tensions in Ukraine and Russia and the U.S. evacuating embassies,” Regan said.
AI leader Nvidia fell 2.2% ahead of its results that are scheduled for after the bell. The index heavyweight dragged the Information Technology sector down 1.15%, as well as the tech-heavy Nasdaq.
Target plunged 20.7% after the retailer forecast holiday-quarter comparable sales and profit below Wall Street expectations following a third-quarter estimate miss.
The consumer discretionary index was the biggest sectoral decliner, falling 1.3%.
Growth stocks like Tesla (NASDAQ:TSLA) and Amazon.com (NASDAQ:AMZN) shed 1.5% and 1.6%, respectively.
All eyes remained on Nvidia, which has nearly tripled in value this year, accounting for about 20% of the S&P 500‘s returns over the last 12 months, according to BofA Global Research.
However, given the lofty earnings expectations, the company could struggle to impress investors. Options traders are primed for a nearly $300-billion swing in Nvidia’s market value after the results.
“We’re starting to see commentary from larger companies that have been deploying capital in the AI, tech spend space talking about examples of how that spend is converting to either higher revenue or cost savings. That bodes well for companies like Nvidia that are on the picks and shovels side of that tech, AI spend trade,” said Bill Merz, head of Capital Markets Research for U.S. Bank’s asset management group.
At 2:10 p.m. ET, the Dow Jones Industrial Average fell 131.56 points, or 0.30%, to 43,137.38, the S&P 500 lost 40.45 points, or 0.69%, to 5,876.53 and the Nasdaq Composite lost 183.64 points, or 0.97%, to 18,803.83.
Cryptocurrency stocks ticked higher as bitcoin jumped above $94,000, with MicroStrategy and MARA Holdings up 14.5% and 17.7%%, respectively.
Traders have increased bets on the U.S. central bank leaving interest rates unchanged at its December meeting in the wake of strong economic data and signs of persistent inflation.
Declining issues outnumbered advancers by a 2.17-to-1 ratio on the NYSE and a 1.74-to-1 ratio on the Nasdaq.
The S&P 500 posted 28 new 52-week highs and 12 new lows while the Nasdaq Composite recorded 81 new highs and 138 new lows.