Dow sinks 330 points as Nvidia slides ahead of earnings report

• Nvidia shares fell 2.2% leading a semiconductor pullback, while markets now assign over 40% probability of a Fed rate hike by January instead of anticipated rate cuts following recent hot inflation data
• Oil prices remained above $110 per barrel for Brent crude despite a 1.4% decline after President Trump delayed a planned military strike on Iran, keeping inflation and monetary policy concerns elevated
• Upcoming Nvidia earnings will test whether AI infrastructure demand justifies elevated semiconductor valuations, while Walmart results will show how consumers are responding to higher fuel prices and inflation

Market Summary

Market Performance:

US equities declined Tuesday with the Dow Jones falling 332 points (-0.67%), the S&P 500 down 0.5%, and the Nasdaq dropping 0.57%. The selloff was driven by investor concerns over inflation, elevated Treasury yields, and Middle East geopolitical tensions.

Semiconductor Sector:

Chip stocks showed mixed performance amid valuation concerns following a historic rally. Nvidia, a key market focus ahead of its earnings report, declined during the session. Micron Technology gained 1.94%, reversing a three-day losing streak, while Seagate Technology rose 0.21% on manufacturing capacity constraint reports related to AI demand. Western Digital also moved during the session.

Energy and Geopolitical Factors:

Brent crude futures fell 1.4% but remained above $110 per barrel after President Trump delayed a planned military strike on Iran. West Texas Intermediate also declined following Monday's sharp gains. Investors remain concerned that sustained geopolitical tensions and elevated energy prices could maintain inflationary pressures and force central banks to keep monetary policy tight.

Interest Rates:

The 10-year Treasury yield eased to around 4.62% after hitting its highest level since February 2025. Following hotter-than-expected inflation data, CME FedWatch shows markets pricing over 40% probability of a Fed rate hike by January—a reversal from anticipated rate cuts.

Key Catalysts:

Investors await Wednesday's Fed minutes for interest rate direction signals. Nvidia's upcoming earnings will provide crucial insight into AI-driven semiconductor demand, while Walmart's results will indicate consumer response to higher fuel prices and inflation pressures.