Nvida (NVDA) Stock: Tech Selloff Intensifies as NVIDIA Drops 8% Amid Tariff Concerns

TLDR

• NVIDIA stock plunged over 8% despite beating quarterly earnings expectations
• President Trump confirmed tariffs against Mexico and Canada will take effect March 4, with additional 10% tariff on China
• Tech sector led market decline with Nasdaq falling 2.8% and S&P 500 dropping 1.6%
• Economic data showed unrevised 2.3% GDP growth and higher-than-expected jobless claims at 242,000
• Investor sentiment has turned bearish with AAII survey showing 60.6% bearish sentiment, a significant increase

The stock market experienced a sharp selloff on Thursday, with technology stocks leading the decline. NVIDIA (NVDA) shares tumbled more than 8% despite the company reporting better-than-expected quarterly earnings.

The tech-heavy Nasdaq Composite fell 2.8%, while the S&P 500 dropped 1.6%. The Dow Jones Industrial Average fared better, declining only 0.4%.

NVIDIA’s earnings initially received a muted response from investors. Though the chipmaker beat expectations, its first-quarter gross margin outlook came in lower than estimates, raising concerns among analysts and investors.

This disappointment in NVIDIA, one of the market’s most influential stocks, rippled through the technology sector. Other semiconductor stocks also declined as traders reassessed the growth potential in artificial intelligence.

Meanwhile, President Donald Trump confirmed that tariffs against Mexico and Canada will go into effect as scheduled on March 4. He also announced an additional 10% tariff on Chinese imports, on top of the 10% implemented earlier this month.

These tariff announcements have created market uncertainty. The topic of tariffs has dominated earnings calls, coming up approximately 700 times during quarterly earnings discussions for S&P 500 companies according to a Bloomberg News analysis.

This frequency represents an all-time high in data going back to 2005. It slightly exceeds the number seen in 2018, when President Trump first enacted tariffs during his previous administration.

Economic Data

Economic data released Thursday painted a mixed picture of the U.S. economy. Fourth-quarter GDP growth remained unrevised at 2.3% annualized, confirming a slowdown from the previous quarter.

Weekly initial jobless claims jumped to 242,000, higher than the 221,000 expected by economists. This increase suggests a softening labor market.

Consumer spending, the primary growth engine of the economy, advanced at a 4.2% pace in the fourth quarter. This healthy consumer activity has helped sustain economic growth despite other challenges.

Investors are now focusing on Friday’s release of the Personal Consumption Expenditures (PCE) index, the Federal Reserve’s preferred inflation gauge. This data point will provide additional clues about the path to interest rate cuts.

According to economists surveyed by Bloomberg, core PCE inflation likely rose 2.6% year-over-year in January. Overall PCE inflation is expected to ease on an annual basis.

The latest American Association of Individual Investors (AAII) Sentiment Survey revealed increasing pessimism among individual investors. Bearish sentiment surged 20.2 percentage points to 60.6%.

At the same time, bullish sentiment dropped to 19.4%, while neutral sentiment decreased to 20%. According to Bespoke Investment Group strategists, these high levels of bearishness are “unprecedented with stocks near recent highs.”

Historically, extreme bearish sentiment has often preceded strong market returns. However, Bespoke noted that large spikes in bearishness during bull cycles have more mixed implications for future performance.

Bitcoin prices, seen by some as a gauge of faith in the Trump administration, continued to pull back from post-election peaks. The cryptocurrency fell below $84,000, hovering near its lowest point since November.

Bond markets also reacted to the day’s developments. The yield on 10-year Treasury notes rose two basis points to 4.28%, while the Bloomberg Dollar Spot Index added 0.6%.

Market volatility has increased in recent days, with intraday swings becoming more pronounced. As Bespoke Investment Group strategists noted, “What the market is doing right now is hardly indicative of where we’ll be an hour from now, let alone the end of the day.”