Stocks decline after Fed minutes with Nvidia on deck
Nvidia shares fall ahead of results, due after market close
Minutes show fed officials hopeful for cooling inflation
Target shares lower after weak results
Indexes off: Dow down 0.63%, S&P 0.54%, Nasdaq 0.57%
Updated at 2:26 p.m. ET/1826 GMT
By Chuck Mikolajczak
NEW YORK, May 22 (Reuters) - U.S. stocks fell onWednesday as investors digested the minutes of the Federal Reserve's most recent meeting ahead of quarterly results from AI chipmakerNvidia, due after the closing bell.
Stocks struggled for direction for most of the session but weakened after the minutes showedU.S. central bank officials still hadfaith price pressures would ease, if slowly.
Three straight months of data had shown sticky inflation before the early May meeting, but price pressures appeared to be cooling afterwards.
Investors are focused on whethersemiconductor bellwether Nvidia's NVDA.O first-quarter results can meet sky-high expectations and will test whether the outsized rally in artificial intelligence-related stocks can be sustained.
Nvidia shares, off 1.5% on the day, have surged about 90% this year after rocketing almost 240% in 2023.
"The markets are just waiting for Nvidia to make sure that even if they beat ... what does it look like going forward and what is the forward-looking thinking with justifying where valuations are," said Megan Horneman, chief investment officer at Verdance Capital Advisors in Hunt Valley, Maryland.
"It's valuations that are more important so regardless of whether it's a knee-jerk reaction to the upside or to the downside, when we start to parse through that earnings report and look at the valuation that some of these companies are asking for, is it too high?"
The Dow Jones Industrial Average .DJI fell 251.19 points, or 0.63%, to 39,621.80. The S&P 500 .SPX lost 28.61 points, or 0.54%, at 5,292.80 and the Nasdaq Composite .IXIC fell96.54 points, or 0.57%, to 16,736.08.
Stocks' rally to record highs this month has been fueled in partby AI optimism, a solid earningsseason and reignitedhopes for rate cuts by the Fed this year.
Analysts polled by Reuters see the S&P 500 closing the year near current levels, at 5,302 points, but warned the index's strong run means it risks a correction in the comingmonths.
Markets are pricing in a 59% chance of the Fed cutting rates by at least 25 basis points at its September meeting, down from 65.7% in the prior session, accordingto CME'sFedWatch Tool.
Chipmaker Analog Devices ADI.O jumped 8.7% after forecasting third-quarter revenue above expectations.
Energy .SPNY was the worst hit sector, downabout 2% asoil prices fell for a third straight session.
Retailer Target TGT.N tumbled8.2% after itsquarterly earnings and current-quarter forecast missed estimates.
TJ Maxx parent TJX TJX.N gained4.1% after raising itsannual profit forecast.
Declining issues outnumbered advancers for a 2.89-to-1 ratio on the NYSE anda 1.59-to-1 ratio on the Nasdaq.
The S&P index recorded 46 new52-week highs and five newlows, while the Nasdaq recorded 110 newhighs and 99 newlows.
Reporting by Chuck Mikolajczak; Editing by Richard Chang
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