Feb 20 (Reuters) - The tech-heavy Nasdaq led losses on Wall Street on Tuesday as chipmaker Nvidia fell sharply in early trading, while retail industry bellwether Walmart's upbeat forecast limited losses on the Dow.
Shares of the chipmaker fell more than 4%, underperforming other megacap stocks and weighing on the Nasdaq (.IXIC), opens new tab.
As investors return following a long weekend, results from chip designer Nvidia (NVDA.O), opens new tab will grab the spotlight after markets close on Wednesday and test market optimism around the potential for artificial intelligence (AI).
AI-fueled bets have helped Nvidia become the third-most valuable U.S. company and recently replace Tesla (TSLA.O), opens new tab as Wall Street's most traded stock.
"The sellout that we're seeing today is driven by the reversal in SMCI (Super Micro Computer) because a lot of hot money was chasing these AI names and then we had the vicious selloff on Friday."
Shares in Super Micro Computer (SMCI.O), opens new tab extended losses by 6.2%, after finishing down 20% on Friday as investors took a break from betting on the stock as a big beneficiary of strong AI technology demand.
Hotter-than-expected U.S. inflation data last week dampened market expectations for an imminent start to the Federal Reserve's easing cycle, halting a strong rally on Wall Street.
The rate cut is expected in June, according to a slim majority of economists polled by Reuters, who also flagged risk of a further delay in the first cut.
Investors are awaiting the release of minutes from the Fed's latest policy meeting as well as remarks from a slew of central bank officials later this week.
Shares of the chipmaker fell more than 4% in early trading, underperforming other megacap stocks and weighing on the tech-heavy Nasdaq (.IXIC), opens new tab.
At 9:40 a.m. ET, the Dow Jones Industrial Average (.DJI), opens new tab was down 31.08 points, or 0.08%, at 38,596.91, the S&P 500 (.SPX), opens new tab was down 26.74 points, or 0.53%, at 4,978.83, and the Nasdaq Composite (.IXIC), opens new tab was down 143.75 points, or 0.91%, at 15,631.91.
Walmart (WMT.N), opens new tab hit a record high and was last up 5.9% after the U.S. retail giant forecast fiscal 2025 sales largely above Wall Street expectations and raised its annual dividend by 9%.
Smart-TV maker Vizio (VZIO.N), opens new tab jumped 15.1% after Walmart said it would buy the company for $2.3 billion.
The retail sector (.SPXRT), opens new tab, however, fell 1.1%.
Home Depot (HD.N), opens new tab fell 1.3% after it forecast 2024 sales below Wall Street estimates, signaling that lackluster home-improvement demand would persist this year.
Discover Financial Services (DFS.N), opens new tab surged 10.8% on Warren Buffett-backed consumer bank Capital One's plans to acquire the U.S. credit card issuer in a $35.3 billion deal.
Intel (INTC.O), opens new tab added 2.6% following a report on Friday that the Biden administration is in talks to award more than $10 billion in subsidies to the semiconductor firm.
GlobalFoundries (GFS.O), opens new tab climbed 2.2% after the U.S. government on Monday awarded $1.5 billion to the contract chipmaker to subsidize semiconductor production.
Declining issues outnumbered advancers for a 1.81-to-1 ratio on the NYSE and for a 1.79-to-1 ratio on the Nasdaq.
The S&P index recorded 15 new 52-week highs and three new lows, while the Nasdaq recorded 34 new highs and 29 new lows.
Reporting by Amruta Khandekar and Bansari Mayur Kamdar; Editing by Shinjini Ganguli
