Aug 28 (Reuters) - Wall Street's main indexes were lower on Wednesday ahead of Nvidia's earnings, with the Nasdaq leading declines, as focus was squarely on if the recent bull market rally that was led by the AI chip firm and other tech-related shares can be sustained.
The three main indexes have swung between small gains and losses this week, with the Dow (.DJI), drifting near a record high and the S&P 500 (.SPX), within 1% of an all-time peak, as investors await Nvidia's (NVDA.O), results after the bell.
The chip designer's shares were down 2.5%. Options pricing shows traders anticipate a move of around 9.8% in Nvidia's shares on Thursday, a day after it reports earnings, data from analytics firm ORATS showed.
Any disappointment in Nvidia's results could hurt megacaps and other semiconductor stocks, which have led 2024's rally on the prospect of artificial intelligence integration boosting corporate profits.
"Investors are a little nervous about what they're going to see and hear from Nvidia ... since expectations have been so high, you sort of wonder how much better can it get," said Sam Stovall, chief investment strategist at CFRA Research.
"The news itself will be driving not only Nvidia's shares, but the technology sector and the overall market."
Other chip stocks such as Broadcom (AVGO.O), and Advanced Micro Devices (AMD.O), fell 1.7% and 2.9%, respectively, with the Philadelphia SE Semiconductor index (.SOX), down 1.9%.
All the growth stocks were in the red, with Meta (META.O), down 0.7%, Microsoft (MSFT.O), lower by 1.1% and Alphabet (GOOGL.O), declining 1.3%.
At 11:49 a.m. ET, the Dow Jones Industrial Average (.DJI), was down 137.89 points, or 0.33%, at 41,112.61, the S&P 500 (.SPX), was down 35.66 points, or 0.63%, at 5,590.14, and the Nasdaq Composite (.IXIC), was down 214.22 points, or 1.21%, at 17,540.60.
Six of the 11 S&P 500 sectors were lower, led by a 1.5% drop in technology stocks (.SPLRCT).
However, bank stocks (.SPXBK), rose more than 1%, with Wells Fargo (WFC.N), and Bank of America (BAC.N), up over 1% each.
Optimism continued to prevail that the U.S. Federal Reserve will lower interest rates at its September meeting after Fed Chair Jerome Powell's support for imminent policy adjustment last week that had sparked broad-based market gains.
Odds of a 25-basis point reduction currently stand at 63.5%, while those of a 50-bps cut are at 36.5%, according to the CME Group's FedWatch Tool.
The Personal Consumption Expenditure report for July, due on Friday, is expected to provide further insight into the pace and magnitude of the central bank's rate-cut trajectory.
Super Micro Computer (SMCI.O), tumbled 24.8% after the AI server maker said it would delay the filing of its annual report for the fiscal year ended June 30, a day after Hindenburg Research disclosed a short position in the company.
The market value of billionaire Warren Buffett's Berkshire Hathaway (BRKa.N), surpassed $1 trillion, with the conglomerate's class B shares rising 0.8%.
Declining issues outnumbered advancers for a 1.47-to-1 ratio on the NYSE and a 2.00-to-1 ratio on the Nasdaq.
The S&P index recorded 73 new 52-week highs and one new low, while the Nasdaq recorded 63 new highs and 68 new lows.
Reporting by Johann M Cherian and Purvi Agarwal in Bengaluru; Editing by Pooja Desai and Shounak Dasgupta
