Dow snaps three-session win streak as US stocks retreat ahead of Nvidia results

The Dow Jones Industrial Average shed roughly 122 points on Tuesday, a 0.23% decline that broke a three-day winning streak and set the tone for a cautious session across Wall Street ahead of Nvidia’s quarterly earnings report.

Nvidia, which now commands a market capitalization north of $5 trillion, has become something like the stock market’s mood ring.

What spooked the market

Two forces converged to push stocks lower. The first was macro: July’s PCE price index, the Federal Reserve’s preferred inflation gauge, came in at 3.7%. That topped the 3.6% consensus forecast. The second force was pure anticipation. Nvidia was expected to report Q2 revenue of approximately $92 billion, representing a staggering 97% increase year-over-year. Earnings per share estimates hovered around $2.09.

Nvidia shares still slipped about 1% during intraday trading ahead of the announcement. This comes just one day after the stock had snapped a seven-day losing streak, closing up 2.2% on Monday.

Nvidia’s awkward history with post-earnings moves

Nvidia has declined after earnings for four consecutive quarters. Despite routinely beating estimates, the stock has sold off each time, a phenomenon that speaks to just how much good news is already priced into the shares.

Nvidia joined the Dow Jones Industrial Average back in November 2024, cementing its status as a bellwether not just for the semiconductor industry but for the entire AI trade. Its inclusion also means that its movements now directly influence the price-weighted Dow, which partly explains why Tuesday’s session turned red.

The inflation backdrop complicates everything

The PCE overshoot, while modest, lands at a particularly inconvenient time. Markets had been pricing in a relatively benign inflation path, and any upside surprise feeds the narrative that the Federal Reserve may need to keep rates higher for longer than investors would like.

The stakes extend well beyond one company’s income statement. Nvidia’s results serve as a proxy for the entire AI capital expenditure cycle. If the company signals that cloud providers and enterprise customers are accelerating their GPU purchases, it validates billions in planned spending from the hyperscalers. If guidance disappoints, it raises uncomfortable questions about whether the AI boom’s most profitable phase has already peaked.