Why Is Nvidia Stock Dropping?
Nvidia (NVDA) stock dropped sharply on Tuesday alongside the top market indices. The graphics chip manufacturer saw a decline of 8% as tech companies fell out of favor with investors.
Market indices declined by 0.6% (S&P 500) and 1.2% (Nasdaq Composite) at the same time, pointing to an overall market retreat. This appears to be a broad market correction after weeks of gains, and it could be a reaction to upcoming interest rate cuts from the federal government. The Federal Open Market Committee (FOMC) will be meeting on Wednesday to discuss when those rate cuts might happen, and that key event has caused the market to react with volatility.
Earnings reports this week from Amazon, Microsoft, Apple and Meta Platforms should all bring the tech stocks into focus. Even though technology stocks have not been as hot investments over the past two weeks as they were earlier in the year, they could come to the forefront again with a week of major earnings reports.
Where Is Nvidia Headed?
As quickly as Nvidia’s stock price has grown this year, it is not surprising to see it pull back every so often. The market tends to correct for fast-rising stocks, and that is likely what we are seeing with this stock as opposed to any problem with the company.
Nvidia has had a great year, increasing by more than 120% since January. On top of that, Nvidia performed very well last year, exceeding analyst expectations and proving to be the darling tech stock.
Even this morning, Nvidia’s stock price is very volatile, climbing 6.84% in premarket trading. It obviously has not entered into a bearish trend that is going to keep pulling it down, but instead remains very mobile. This stock, more than most others, will react very powerfully to whatever the FOMC has to say today.
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