Wall Street Erases Early Gains and Shifts to ‘Wait-and-See’ Mode

Quick overview

After Tuesday’s strong rally, markets are showing caution. Nvidia is in the spotlight as investors await its quarterly results, all against a backdrop of rising trade tensions between the U.S. and China.

Wall Street’s rebound stalls just hours before Nvidia Corp.—the last of the “Magnificent Seven” mega-cap tech firms—reports earnings. The S&P 500 is down 0.3%, the Nasdaq 100 slips 0.2%, and the Dow Jones Industrial Average falls 0.4%.

Following a solid advance in the previous session, the S&P 500 dips as Nvidia, the world’s most valuable chipmaker, trades with increased volatility. The stock, up over 40% since its April low, is expected to move roughly 6% in either direction after earnings, according to options markets. Valued at $3.3 trillion, Nvidia is seen as a key barometer for demand in the artificial intelligence sector.

“Nvidia’s earnings report is pivotal—not just for the company, but for the entire stock market,” said James Demmert of Main Street Research. “It has the potential to reignite investor optimism and refocus attention on the power of AI, shifting the narrative away from tariffs and tax policy coming out of Washington.”

U.S. Treasury yields rose amid a wave of new debt issuance, following signs of weaker demand in recent auctions. In Japan, a 40-year bond sale saw the lowest demand since July. In the U.S., Wednesday’s auctions focused on the shorter end of the curve, including a $70 billion issuance of five-year notes.

The 10-year Treasury yield rose by five basis points to 4.49%. The dollar index gained 0.3%. Oil prices climbed as the market assessed the risk of further U.S. sanctions on Russia and the potential breakdown of nuclear negotiations with Iran.

Nvidia and other major tech stocks were among last month’s biggest losers during a pullback that pushed the S&P 500 near bear market territory. Many have since recovered a large portion of those losses, helped by the temporary suspension of harsher tariffs by President Donald Trump and earnings reports that showed resilient demand.

Nvidia’s sharp rally from April lows hasn’t been accompanied by notably high trading volume, suggesting some investors may have missed the move. A strong earnings report could signal further upside for U.S. equities, particularly with investors still holding about $7 trillion in money market funds, according to BBVA strategists.

U.S. stocks have lost momentum after a rally driven by signs that the U.S. and the European Union are accelerating trade talks.

Key Data Points Under Market Watch

In Europe, all major indexes fell except the EuroStoxx. EU Trade Commissioner Maros Sefcovic said he plans to speak Thursday with U.S. Commerce Secretary Howard Lutnick and Trade Representative Jamieson Greer, aiming to speed up negotiations and reach an agreement before July 9.

“Recent developments on the trade front remain consistent with our base case: that pragmatism will ultimately triumph over confrontation,” said Ulrike Hoffmann-Burchardi of UBS Global Wealth Management. “So far, the Trump administration has signaled a willingness to temper its more aggressive tariff policies in response to signs of market stress.”

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Ignacio Teson

Economist and Financial Analyst

Ignacio Teson is an Economist and Financial Analyst. He has more than 7 years of experience in emerging markets. He worked as an analyst and market operator at brokerage firms in Argentina and Spain.

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