Nvidia and Intel Drop as Tech Stocks Falter; Wells Fargo Pops

Trade tensions and signs of stiffening competition weighed on a number of stocks in the AI space Tuesday. Meanwhile, stronger-than-expected quarterly profits helped lift shares of a large bank.

The Dow finished 0.4% higher, but the S&P 500 lost 0.2% and the tech-heavy Nasdaq dropped 0.8% as tech-sector losses dragged on the major indexes. See here for more market coverage from Investopedia.

AI darling Nvidia (NVDA) and other semiconductor stocks were among the S&P 500’s biggest decliners amid worries about shifting U.S.-China trade policies. Nvidia shares dropped over 4%, along with shares of Intel (INTC), which received a downgrade from Bank of America analysts suggesting the stock has climbed “too far, too fast” on enthusiasm for its recent AI deals.

Arista Networks (ANET) shares dropped nearly 6%, falling the furthest of any S&P 500 stock after Nvidia announced that a pair of major AI players would be adopting its switches in their data centers, representing a competitive threat to Arista’s switches.

A judge in Texas ruled in favor of the federal government in a lawsuit from health insurer Humana (HUM) challenging downgrades to its Medicare Advantage star ratings. The court determined that the Centers for Medicare & Medicaid Services acted legally in lowering Humana’s ratings, which affect the reimbursements received by insurers. Humana shares lost 3.5%.

Wells Fargo (WFC) shares surged over 7% to notch the S&P 500’s top performance of the day, after the financial firm beat third-quarter profit forecasts and boosted its profitability outlook. In June, the Federal Reserve lifted asset restrictions on the banking giant that it imposed in 2018 following a series of scandals. CEO Charlie Scharf emphasized that the removal of regulatory constraints positions the bank for stronger growth.

Addressing the National Association for Business Economics conference in Philadelphia Tuesday afternoon, Federal Reserve Chair Jerome Powell suggested the central bank could be positioned for two more interest-rate cuts this year. Optimism around rate reductions helped boost companies exposed to the housing market, which stand to benefit as mortgage rates ease. Shares of residential construction supplier Builders FirstSource (BLDR) jumped 6.1%.

Walmart (WMT) stock surged about 5% after the retail giant announced a partnership with ChatGPT developer OpenAI. According to Walmart, the new collaboration will allow shoppers to discover and buy items via instant checkout directly through the AI platform. The retailer also plans to enable conversational interactions with ChatGPT in the search bar on its websites.