No risk, no gains, as they say. However, growing optimism that the U.S. Federal Reserve may cut interest rates for the first time since 2020 is prompting investors to adopt a risk-off approach, shifting their focus from volatile assets to safer ones. This shift in sentiment has caused Wall Street to reverse course, ending several strong streaks. Jackson Hole this week may further shake up the markets.
Nvidia ended its longest winning streak since March as investors took a more cautious stance despite its massive valuation of $3.13 trillion and an otherwise calm market. On Tuesday, Nvidia stock dropped over 2%, closing at $127.25 per share.
This decline wasn't tied to any specific event but was part of a broader market pullback, with all three major stock indexes trending lower.
The S&P 500 index fell 0.2% on Tuesday, breaking an eight-day streak of consecutive gains. The Nasdaq Composite also declined 0.3%, ending a similar streak. Meanwhile, the Dow Jones Industrial Average saw its five-day winning streak come to an end.
Despite the recent dip, Nvidia stock is likely to see movement in the coming trading sessions. The chipmaker is set to release its earnings report on August 28, which will be a key focus as the earnings season draws to a close.
Besides, Nvidia still boasts an impressive 164% increase this year. In comparison, the S&P 500 has risen about 17%, while the tech-heavy Nasdaq Composite is up 19% over the same period. However, Nvidia remains about 6% below its record high of $135.58, reached on June 18.
With no major news driving the market, investors still have chosen to play it safe. The Federal Reserve is set to release the minutes from its most recent meeting three weeks ago. At that meeting, Fed officials decided to keep interest rates unchanged, but markets are anticipating a potential rate cut at the September meeting, with expectations ranging from 25 basis points to as much as 50 basis points. Before that, central bankers will gather in Jackson Hole for a three-day symposium, where Fed Chair Jay Powell is expected to make a market-moving speech on Friday. Big things are on the horizon.