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Nvidia ( NVDA ) shares fall ahead of results, due after market

close

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Minutes show fed officials hopeful for cooling inflation

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Target ( TGT ) shares lower after weak results

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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 on Wednesday as investors digested the

minutes of the Federal Reserve's most recent meeting ahead of

quarterly results from AI chipmaker Nvidia ( NVDA ), due after the

closing bell.

Stocks struggled for direction for most of the session

but weakened after the minutes showed U.S. central bank

officials still had faith 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 whether semiconductor

bellwether Nvidia's ( NVDA ) first-quarter results can meet

sky-high expectations and will test whether the outsized rally

in artificial intelligence-related stocks can be sustained.

Nvidia ( NVDA ) 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 ( NVDA ) 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 fell 251.19

points, or 0.63%, to 39,621.80. The S&P 500 lost 28.61

points, or 0.54%, at 5,292.80 and the Nasdaq Composite

fell 96.54 points, or 0.57%, to 16,736.08.

Stocks' rally to record highs this month has been fueled in

part by AI optimism, a solid earnings season and reignited hopes

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 coming months.

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, according to CME's FedWatch Tool.

Chipmaker Analog Devices jumped 8.7% after

forecasting third-quarter revenue above expectations.

Energy was the worst hit sector, down about 2%

as oil prices fell for a third straight session.

Retailer Target ( TGT ) tumbled 8.2% after its quarterly

earnings and current-quarter forecast missed estimates.

TJ Maxx parent TJX gained 4.1% after raising its

annual profit forecast.

Declining issues outnumbered advancers for a 2.89-to-1 ratio

on the NYSE and a 1.59-to-1 ratio on the Nasdaq.

The S&P index recorded 46 new 52-week highs and five new

lows, while the Nasdaq recorded 110 new highs and 99 new lows.