US stocks drop as AI trade takes a breather ahead of Nvidia earnings

• US stocks dropped on Tuesday as the AI trade cooled down ahead of Nvidia's earnings report.
• Shares of Nvidia and Super Micro Computer both fell by about 5% in Tuesday trades.
• Solid earnings results from Walmart and Home Depot painted a solid picture of the US consumer.

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US stocks dropped on Tuesday with the AI trade cooling down ahead of Nvidia's fourth-quarter earnings results.

Nvidia and Super Micro Computer stock both declined by about 5% on Tuesday as investors take profits ahead of what could be a market-moving event when Nvidia CEO Jensen Huang kicks off his company's earnings call after the market close on Wednesday.

Nvidia has been largely responsible for spurring a rally in tech stock over the past year thanks to excitement towards artificial intelligence. Now, investors want to see how much financial strength is behind the AI hype.

Meanwhile, retailers Walmart and Home Depot reported earnings on Tuesday, with both companies beating revenue and profit projections. Walmart stock jumped 3% after it announced a 9% dividend hike and prepares for a 3-for-1 stock split later this month, while Home Depot stock traded about flat.

Of the 79% of S&P 500 companies that have reported earnings results so far, 80% beat profit estimates by a median of 7% and 64% are beating revenue estimates by a median of 3%, according to Fundstrat.

Here's where US indexes stood at the 4:00 p.m. closing bell on Tuesday: 

• S&P 500: 4,975.51, down 0.6%
• Dow Jones Industrial Average: 38,563.80, down 0.17% (-64.19 points)
• Nasdaq Composite: 15,630.78, down 0.92%

Here's what else happened today: 

• Goldman Sachs increased its S&P 500 price target for the second time since November to 5,200, representing potential upside of about 4% from current levels. The bank said strong earnings were behind the change.
• Here's what investors should watch for when Nvidia reports its earnings results on Wednesday, according to Wedbush analyst Dan Ives.
• A glut of supply of lab-made diamonds are likely to result in a price decline, according to analysts.
• Nintendo stock fell 5% on Tuesday after a report said it would delay its Switch 2 console launch until early 2025.
• Here's what Wall Street expects to hear from Nvidia when it reports its fourth-quarter results on Wednesday.

In commodities, bonds, and crypto: 

• West Texas Intermediate crude oil fell 1.66% to $77.16  a barrel. Brent crude, the international benchmark, dropped 1.32% to $82.46 a barrel. 
• Gold climbed 0.57% to $2,035.60 per ounce. 
• The 10-year Treasury yield was flat at 4.27%.
• Bitcoin climbed 0.79% to $52,188.