Stock Market Indexes Meet Resistance As Nvidia Backs Off From Record High

Enthusiasm over Nvidia‘s (NVDA) bullish earnings report evaporated Thursday, as the stock market reversed lower and the main indexes met resistance at a key chart level.

In afternoon trading, the Nasdaq composite slid 1.1% after opening 0.8% higher. The S&P 500 was down 0.7%.

The Dow Jones Industrial Average lost 0.6%. Dow component Boeing (BA) tripped up 3.7%, falling below its 50-day moving average and below the 223.91 buy point of a July 26 breakout.

The company’s 737 Max planes were found to have faulty drill holes in fuselage components made by Spirit AeroSystems (SPR). The Federal Aviation Administration says there’s no immediate safety risk, and it’s unclear how the issue will impact 737 deliveries. Spirit shares tumbled 15% in heavy trading to the lowest price since October 2020.

Volume rose on the Nasdaq and fell on the NYSE compared with the same time on Wednesday. Declining stocks topped advancers by a 5-2 ratio on the Nasdaq and by 12-5 on the NYSE.

All three indexes climbed to their 50-day moving average before getting turned back, a concerning sign of resistance for the stock market.

The Russell 2000 fell 0.7% as well. The Innovator IBD 50 ETF (FFTY) pared its loss to 0.8%.

Many tech stocks also reversed lower in heavy trading, including Super Micro Computer (SMCI), Lattice Semiconductor (LSCC), Broadcom (AVGO) and Palantir (PLTR).

Technology Select Sector SPDR (XLK) also reversed lower and was off 1.3% in afternoon trading.

Nvidia Earnings Impress Stock Market

Nvidia late Wednesday breezed past analysts’ expectations for July-quarter sales and earnings. The company also raised its guidance for the current quarter. The stock jumped to a record high but trimmed its gain to 3.2% in afternoon trading.

Just like it did three months ago, Nvidia cited abundant demand for chips used in generative AI for its success. CEO Jensen Huang hailed the dawn of a “new computing era” based on AI and accelerated computing.

Splunk (SPLK) broke out of a flat base in heavy trading after the data analytics company beat expectations for its July-ended quarter. Earnings growth soared 689% from the year-ago period, and management raised its outlook. Shares rallied nearly 14% in big volume, topping a 112.03 buy point.

Snowflake (SNOW) reversed sharply lower, despite beating earnings expectations late Wednesday. The stock is right back below its 200-day line.

The retail sector’s woes continued. Dollar Tree (DLTR) plunged 10%, to the lowest point in 14 months. The discount chain beat sales and profit estimates. But gross margin fell and the company suffered more inventory losses from shoplifting and other factors.

Dollar Tree is today’s worst performer in the S&P 500. SPDR S&P Retail ETF (XRT) fell 1.6% and is near two-month lows.

Jobless Claims, Durable Goods

A day ahead of Fed Chair Jerome Powell’s speech at a gathering of central bank officials, economic data was generally positive.

Claims for first-time unemployment benefits fell by 10,000 to 230,000. Last week’s claims came in below forecasts for 241,000, according to Econoday.

Durable goods orders fell 5.2% in July, more than economists’ consensus estimate for a 4% drop. It was the first decline in new orders since February. But excluding transportation, orders rose 0.5%, above forecasts.

“Although Chair Powell will likely take comfort from cooling business spending when he speaks at Jackson Hole on Friday, the continued resilience of the U.S. economy signals that his speech is likely to reinforce the theme that the FOMC may keep rates higher for longer,” Erik Johnson, BMO Capital Markets senior economist, said in a note.