NVIDIA (NVDA) stock turned in one of the more disappointing performances for Tuesday’s trading session.
Shares of the semiconductor company surged more than 2% higher at the open. Investors reacted positively to Jensen Huang’s presentation at the Consumer Electronics Show (CES) in Las Vegas on Monday night.
That excitement quickly reversed into a relatively heavy volume selling day that took the stock 5% lower before the close.
The lack of confidence in NVIDIA shares reflects the market’s raised tensions as we head into one of the more difficult trading periods of the year.
Historically, stocks begin a 4–6-week slump as they enter the second trading week of January and the kick-off of earnings season.
This year, stocks have the additional pressure of rising interest rates stoking fears that stocks are likely to make a correction. On Tuesday, yields on the Ten-Year Treasury hit 4.7%, their highest since April 2024.
The sudden jump in interest rates reflects the bond market’s adjustment to the outlook for interest rates. Originally, investors had expected four interest rate cuts in 2025. Those expectations have been halved to just two 0.25% drops by the Fed.
NVIDIA, being one of the most-watched stocks on Wall Street, can reflect sentiment for the entire market. Today’s reversal in trading for the chip giant bodes poorly for the market’s short-term outlook.
Shares of NVIDIA have posted a strong 15% rally over the last two weeks trading, pushing the stock towards the $150 price level for the second time in two months’ time.
Today’s reversal from that round-number will have a psychological effect on investors that stocks are stretched thin and ready for a correction.
In NVIDIA’s case, a move back below $140 and the stock’s 50-day moving average is likely to trigger additional selling pressure.
Shares have been trading in a relatively light range, however the last two weeks have seen a short-term pattern of lower highs and lower lows develop. This indicates that the stock is shifting from positive to negative momentum.
Investors should pay special attention to any move below $130. Shares found support at this price in mid-December, an if broken NVIDIA is likely to see $120 per share quickly.
From a long-term perspective, NVIDIA remains a leader in the semiconductor sector with a bullish outlook.
