The benchmark S&P 500 on Wall Street and equities in Europe finished lower as investors digested another blowout quarter from Nvidia, the world’s most valuable company, but worried about its market value even as it forecast that first-quarter revenue would be a whopping US$78 billion.
On Wall Street, technology and communication services were the biggest losers, with Nvidia’s shares closing down 5.5%. The Dow Jones Industrial Average edged higher by 0.03%, the S&P 500 lost 0.53%, and the Nasdaq Composite fell 1.2%.
“People are getting concerned about lofty valuations even though when you look at a company like Nvidia, the estimates, cash flow, and everything else are dramatically higher,” said Thomas Plumb, chief executive and portfolio manager at Plumb Funds in Madison, Wisconsin.
“But I think the sentiment will eventually match up with the realities,” said Plumb, who has Nvidia as his largest investment holding.
In Europe, the broad STOXX 600 index edged lower by 0.05% after touching a new record high. MSCI’s All Country World Index eased 0.2% after rising to a record high of 1,063.86.
“It’s an increasingly cloudy future for AI,” said James St. Aubin, chief investment officer at Ocean Park Asset Management in Santa Monica, California. “It’s not that AI isn’t going to work out. It’s about who’s going to be the winners? How do these firms keep competitive advantages? There’s a lot of upstream and downstream impact that the market is really having trouble sorting out.”
Several heavyweight technology companies finished lower on Wall Street. Alphabet declined 1.7%, Apple fell 0.5%, Amazon lost 1.3%, and Tesla shed 2.1%.
“I always go back to the curse of high expectations, where with Nvidia, everything has to be perfect in order for it to continue to thrive and to appreciate. And I think right now they maybe didn’t reassure investors enough that the line of sight was clear,” St. Aubin said.
Salesforce, which reported quarterly revenue higher than analyst estimates after markets closed on Wednesday, rose 4%.
London Stock Exchange Group’s shares jumped 9% in London after it announced a US$4.1 billion buyback under pressure from activist investor Elliott Management, which recently built a stake in the data provider.
Investors are eyeing indirect talks between the US and Iran over their long-running nuclear dispute. Oil prices slipped in a volatile session as markets awaited the outcome of the talks.
Brent crude futures LCOc1 fell 0.14% to settle at US$70.75 a barrel. US crude futures CLc1 settled down 0.32% to US$66.21.
Treasury bond prices in the US and Europe edged higher on the back of safe-haven bids as investors grew nervous about tensions involving Iran.
The yield on benchmark US 10-year notes fell 3.6 basis points to 4.012%. The 2-year note yield fell 3.5 basis points to 3.436%.
In Europe, the yield on benchmark German 10-year Bunds lost 0.8 basis points to 2.69%.
Safe-haven gold rose, with spot gold adding 0.29% to US$5,185.04 an ounce.
In currency markets, the dollar rose against major currencies, including the euro and Swiss franc.
The euro EUR= was down 0.09% at US$1.1798 against the dollar. The dollar was up 0.23% to 0.774 against the Swiss franc.
The Japanese yen rose 0.16% to 156.1 against the greenback days after the government of Prime Minister Sanae Takaichi nominated two pro-stimulus academics to the board of the Bank of Japan.