Nvidia's Earnings Miss Drags Stock Down 8% Despite S&P 500 Record High

On Wednesday, U.S. stock markets surged as traders anticipated the earnings report from Nvidia, the last of the seven tech giants to release its financial results. The optimism was driven by the expectation that Nvidia's performance would continue to bolster the tech sector, which has been a significant contributor to the market's recent gains. However, Nvidia's after-hours earnings report, which included a lackluster revenue forecast for the current quarter, led to a decline in its stock price.

Despite the setback for Nvidia, the S&P 500 index managed to close at a new record high, marking its third consecutive day of gains. The index's performance was supported by a broad-based rally, with several sectors contributing to the overall positive sentiment. The tech-heavy Nasdaq Composite index also saw gains, although it closed relatively flat compared to the previous day.

Nvidia, with a market capitalization of 4.4 trillion dollars, holds a significant weight in the S&P 500 index, accounting for approximately 8% of its total value. The company's earnings report for the third fiscal quarter, ending in October, revealed revenue of approximately 54 billion dollars. While this figure met analysts' average estimates, it fell short of some more optimistic projections that had anticipated revenue exceeding 60 billion dollars. The company's growth trajectory, which has been characterized by exponential increases, shows no signs of slowing down, according to Jay Woods of Freedom Capital Markets.

Other notable movers in the market included Kohl’s Corp., which surged by 24%, marking its best performance since July 22. This rally was driven by the company's more optimistic outlook on full-year sales, indicating that its efforts to turn around its struggling retail business are gaining traction. Abercrombie & Fitch, on the other hand, saw a decline as investors scrutinized its slightly better-than-expected quarterly performance. Additionally, American Eagle Outfitters jumped by 8.5%, benefiting from a new collaboration with Travis Kelce, the fiancé of Taylor Swift. Krispy Kreme, the doughnut company, experienced a 3.5% drop after Morgan Stanley downgraded its rating to underweight, citing execution risks in its turnaround plan.

The overall market sentiment remained positive, with the S&P 500 index closing at 6,481.4 points, up by 0.24%. The Dow Jones Industrial Average also saw gains, rising by 0.32% to close at 45,565.23 points. The Nasdaq Composite index ended the day at 21,590.14 points, up by 0.21%. The market's resilience, despite the mixed reactions to individual company earnings, underscores the ongoing strength of the U.S. stock market. Investors continue to focus on the long-term growth prospects of tech companies, even as they navigate short-term volatility and geopolitical uncertainties.