Markets Stumble As Fed Signals, Earnings, And AI Crosscurrents Drive Volatility

Market Overview - The S&P 500, Nasdaq Composite, and Dow Jones Industrial Average all fell around 1%, with the Dow experiencing its steepest drop after a record high since 1999 [2] - The Russell 2000 was the only index to close positive, gaining 0.3% [2] Earnings Reports - Lowe's reported a beat on earnings with comparable same-store sales up 0.4% for the quarter, while Target's shares fell over 2% due to a revenue miss, with same-store sales down 2.7% against an estimated drop of 2.1% [3][4] - Target lowered its guidance and announced plans to increase capital expenditures [4] Federal Reserve Insights - The minutes from the recent Federal Reserve Open Market Committee meeting will be released, with analysts looking for insights on the Fed's thinking amid limited economic data [5] - The probability of a rate cut in December has dropped to just under 47%, down from 94% a month ago [5] Nvidia's Earnings Anticipation - Nvidia is set to report quarterly results, with analysts expecting earnings of $1.26 per share and the options market pricing in an expected move of 7% by Friday [6] - Key questions for Nvidia's performance include forward guidance, demand for chips, and the impact of trade restrictions with China [6] AI Investment Concerns - There are growing questions about the sustainability and ethical implications of investments in AI, highlighted by Nvidia and Microsoft's $15 billion investment in Anthropic [7][8] - The potential outcomes of current investment dependencies in AI include stronger codependency, a focus on fewer startups, or a wave of acquisitions by larger companies [8] Trading Outlook - The release of FOMC minutes and Nvidia's earnings announcement could lead to significant market volatility [9] - Traders who favor volatility may find this week particularly engaging, while those averse to it may prefer to wait for more stable conditions [9]