- The Dow Jones shed around 200 points on Wednesday.
- Fresh tariff threats from US President Trump, but the can has been kicked again.
- Tech sector its faces next challenge in Nvidia earnings due after the bell.
The Dow Jones Industrial Average (DJIA) missed out on slim gains found by other US equity indexes, backsliding around 200 points as investors remain uneasy in the face of renewed tariff threats from US President Donald Trump. Upcoming earnings figures from AI frontrunner Nvidia (NVDA) are also due during the overnight session after the market close on Wednesday, and pose the next bump in the road for the tech sector rally that has fizzled in recent weeks.
Read more: US President Donald Trump widens scope of tariffs, but pushes back timeline
Never one to miss an opportunity, President Trump hit markets with renewed tariff threats on Wednesday. He widened the scope of his planned import taxes to include a 25% tariff on European goods. Details remain elusive, but President Trump announced his intention to impose additional tariffs on European goods, including “cars and other things.” Donald Trump also re-reiterated his insistence that the US does not “need” Canadian Crude Oil or lumber, and that 25% tariff packages on both Canada and Mexico are still coming. However, President Trump once again kicked the can, declaring that his for-sure tariffs on Canada and Mexico will now be taking effect on April 2nd.
Dow Jones news
Nvidia has risen around 2% on Wednesday in the runup to its post-market Q4 earnings report, but bidders in the AI rally are still holding on tight for year-end results from 2024. As one of the frontrunners in the tech ecosystem that has sprouted up around delivering data solutions to AI services, Nvidia earnings could be a make-or-break bellwether of what kind of year the AI tech rally could be looking at. Market expectations of earnings on the back of AI-fueled growth have moonshot over the past year, with investors dissatisfied with anything less than triple-digit profit growth. Nvidia was last seen trading near $360 per share.
Dow Jones price forecast
The Dow Jones hit a three-day high near 43,860 early on Wednesday before the major equity index got knocked lower, chalking in a fresh technical rejection of the 50-day Exponential Moving Average (EMA) in the process. The Dow is still trading within a near-term consolidation pattern that kicked off with last Friday’s sharp downside correction, but a technical floor appears to be priced in from 43,200.
Dow Jones daily chart
AI stocks FAQs
First and foremost, artificial intelligence is an academic discipline that seeks to recreate the cognitive functions, logical understanding, perceptions and pattern recognition of humans in machines. Often abbreviated as AI, artificial intelligence has a number of sub-fields including artificial neural networks, machine learning or predictive analytics, symbolic reasoning, deep learning, natural language processing, speech recognition, image recognition and expert systems. The end goal of the entire field is the creation of artificial general intelligence or AGI. This means producing a machine that can solve arbitrary problems that it has not been trained to solve.
There are a number of different use cases for artificial intelligence. The most well-known of them are generative AI platforms that use training on large language models (LLMs) to answer text-based queries. These include ChatGPT and Google’s Bard platform. Midjourney is a program that generates original images based on user-created text. Other forms of AI utilize probabilistic techniques to determine a quality or perception of an entity, like Upstart’s lending platform, which uses an AI-enhanced credit rating system to determine credit worthiness of applicants by scouring the internet for data related to their career, wealth profile and relationships. Other types of AI use large databases from scientific studies to generate new ideas for possible pharmaceuticals to be tested in laboratories. YouTube, Spotify, Facebook and other content aggregators use AI applications to suggest personalized content to users by collecting and organizing data on their viewing habits.
Nvidia (NVDA) is a semiconductor company that builds both the AI-focused computer chips and some of the platforms that AI engineers use to build their applications. Many proponents view Nvidia as the pick-and-shovel play for the AI revolution since it builds the tools needed to carry out further applications of artificial intelligence. Palantir Technologies (PLTR) is a “big data” analytics company. It has large contracts with the US intelligence community, which uses its Gotham platform to sift through data and determine intelligence leads and inform on pattern recognition. Its Foundry product is used by major corporations to track employee and customer data for use in predictive analytics and discovering anomalies. Microsoft (MSFT) has a large stake in ChatGPT creator OpenAI, the latter of which has not gone public. Microsoft has integrated OpenAI’s technology with its Bing search engine.
Following the introduction of ChatGPT to the general public in late 2022, many stocks associated with AI began to rally. Nvidia for instance advanced well over 200% in the six months following the release. Immediately, pundits on Wall Street began to wonder whether the market was being consumed by another tech bubble. Famous investor Stanley Druckenmiller, who has held major investments in both Palantir and Nvidia, said that bubbles never last just six months. He said that if the excitement over AI did become a bubble, then the extreme valuations would last at least two and a half years or long like the DotCom bubble in the late 1990s. At the midpoint of 2023, the best guess is that the market is not in a bubble, at least for now. Yes, Nvidia traded at 27 times forward sales at that time, but analysts were predicting extremely high revenue growth for years to come. At the height of the DotCom bubble, the NASDAQ 100 traded for 60 times earnings, but in mid-2023 the index traded at 25 times earnings.
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