Wall Street falls ahead of Nvidia results amid doubts over US rate cuts

A trader works on the floor of the New York Stock Exchange. Photo / Getty Images

Global stock markets have taken a hit overnight as traders waited for key earnings reports, notably from US$5 trillion ($8.8t) chip giant Nvidia, amid concerns that the US Federal Reserve could hold off on further rate cuts this year.

On Wall Street, the Dow retreated 1.2% while the tech-heavy Nasdaq lost 0.8%. The broader-based S&P 500 slid 0.9%.

The sell-off has hit Australia hard again today, with the ASX200 falling a hefty 1.30% as of 12pm (local time).

Investors are hoping for another blockbuster quarter from the world’s only US$5t company – but anything short of perfection could result in panic.

Many are already taking profits as a stock market slump continues this morning. The sell-off has dragged CNN’s Fear & Greed Index sharply lower. The gauge – which tracks seven indicators, including market momentum and stock price strength – dropped to 14 out of 100 by late on Monday (local time).

It’s the weakest reading since April, when President Donald Trump imposed higher-than-expected tariffs.

Europe lacked inspiration too with the Dax closing off 1.2% while London and Paris lost marginal ground.

Major Asian indices had earlier finished lower as well, amid simmering tensions between China and Japan which hit tourism and retail firms on Tokyo’s exchange.

Besides Nvidia, which dropped 1.9%, US retailers Home Depot, Target and Walmart are also set to release their earnings reports.

Those will be monitored for signs of how consumers are faring as Trump’s tariffs bite.

Traders are also waiting for US Government data on how the labour market fared in September. The numbers are due for publication on Thursday (local time), after the end of the longest Government shutdown in US history.

Peter Cardillo from Spartan Capital Securities said it would be the first glimpse of some macro news that could provide hints on the Fed’s preferred path for interest rates.

Among companies, he added: “It’s all up to Nvidia, whether or not it can turn the souring negative sentiment on the AI [artificial intelligence] sector.”

Dave Grecsek of wealth management firm Aspiriant added that if Nvidia could meet high expectations, “that could sort of stabilise the market a little bit”.

The European Union on Monday (local time) cut its eurozone growth forecast for 2026 as risks from international trade and geopolitical tensions weighed on Europe’s economy.

Investors have in recent weeks reconsidered prospects for US rate cuts and the AI-fuelled tech rally that had lifted several markets to record highs.

Traders are keenly awaiting the release of several reports – including on jobs and inflation – that had been held up by the record US Government shutdown that ended last week.

With data releases delayed, “chances are growing that the Fed will avoid changing monetary policy when the economic outlook remains murky”, Kathleen Brooks, research director at trading group XTB, said.

Fed boss Jerome Powell signalled last month that a December cut to borrowing costs was not assured, adding to uncertainty.

All eyes are on this week’s earnings update from Nvidia, the world’s most valuable company, which late last month hit a market capitalisation of US$5t before slipping back.

For now, Bitcoin suffered from the uncertain climate on trading floors. The cryptocurrency had climbed to a record high of US$126,251 on October 6, buoyed by Trump’s pledges to ease regulation on the crypto sector, but has fallen from that level to around US$91,634.45.

Sign up to Herald Premium Editor’s Picks, delivered straight to your inbox every Friday. Editor-in-Chief Murray Kirkness picks the week’s best features, interviews and investigations. Sign up for Herald Premium here.