The stock market opened in the red Tuesday ahead of the Federal Reserve’s policy meeting, starting this afternoon. So why are stocks down today?
Well, it appears investors are concerned that the central bank will take a more staunchly hawkish stance in the wake of several unflattering inflation reports since the late January meeting. Indeed, February inflation data released last week showed prices continue to prove more stubborn than previously indicated.
Stocks have been down the past two weeks largely on the notion that the Fed may delay rate cuts until even further into the year. Reasonably so, according to the CME FedWatch Tool, the Fed has just a 1% chance of lowering interest rates this week and a 7.3% chance of cutting rates in May.
As such, economists are keeping a close eye on this week’s meeting for any indication of when to expect monetary policy changes.
Stocks Slide as Chipmakers Tumble
Both the S&P 500 and Nasdaq Composite are down this morning, 0.2% and 0.7%, respectively.
Chipmakers are the notable losers today as Nvidia (NASDAQ:NVDA) and Advanced Micro Devices (NASDAQ:AMD) tread well in the red heading into the afternoon. NVDA stock is down 2.4%, while AMD eyes a more than 6% loss at the time of writing.
Nvidia’s decline comes as a particular surprise, given the company’s recent introduction of a new line of artificial intelligence (AI) chips. Indeed, at its GPU Technology Conference (GTC) on Monday, Nvidia unveiled a new generation of AI-powered graphics cards dubbed Blackwell, set to ship later this year.
The announcement sparked positive responses from analysts, with many raising their price target on the red-hot chipmaker. This includes Goldman Sachs analysts who raised their price target on NVDA to $1,000 per share from $875 while maintaining their “buy” rating.
“Based on our recent industry conversations, we expect Blackwell to be the fastest ramping product in Nvidia’s history,” the analysts noted. “Nvidia has played (and will continue to play) an instrumental role in democratizing AI across many industry verticals.”
Investors were clearly less impressed by the new chip, at least, so it seems from the stock’s movement today.
That said, NVDA has enjoyed a gangbuster year thus far, leading the so-called “Magnificent Seven” tech stocks with gains of about 80% year-to-date.
On the date of publication, Shrey Dua did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
