Why are retail results impacting the AI leader's stock?

While there might not seem to be much immediate overlap between Nvidia and retail, Walmart and Home Depot are often viewed as bellwethers for the broader economy. Their quarterly results can provide a lot of valuable information about consumer sentiment and overall macroeconomic conditions, and Wall Street didn't like what it saw when the two companies reported earnings before market open this morning.

While Walmart beat earnings expectations and issued encouraging forward guidance, the company's guidance could be taken as a sign that the economy is still running hot and that inflation isn't tapering enough. Home Depot was more explicit with its comments on inflation, stating that it was seeing unfavorable demand trends due to persistent inflation.

In addition to raising another red flag that the Federal Reserve's battle with inflation hasn't been won yet, Home Depot's comments could also be interpreted as a negative indicator for the housing market. Stocks don't trade in a vacuum, and Nvidia's valuation is feeling that today. $NVIDIA(NVDA.US)$ $Advanced Micro Devices(AMD.US)$ $Direxion Daily Semiconductor Bull 3x Shares ETF(SOXL.US)$