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Lowe's warns of margin pressure in Q2

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IBM ( IBM ) rises after it makes more AI models open-source

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Nvidia ( NVDA ) options imply 8.7% swing after earnings

(Updated at 4:00 p.m. ET/2000 GMT)

By Chuck Mikolajczak

NEW YORK, May 21 (Reuters) - U.S. stocks closed with

slight gains on Tuesday as investors assessed the latest round

of comments from Federal Reserve officials for clues on the

timing of a rate cut and the quarterly earnings from Nvidia ( NVDA ) drew

closer.

Nvidia ( NVDA ), Wall Street's third-largest firm by market

capitalization, will report results after the closing bell on

Wednesday in what is likely to be a significant market catalyst

and will test whether the outsized rally in AI-related stocks

can be sustained.

Nvidia's ( NVDA ) options are primed for an 8.7% swing, or $200

billion in market cap, in either direction by Friday, according

to data from options analytics firm Trade Alert. The chipmaker's

shares were up modestly on Tuesday and are up about 92% on the

year, after surging nearly 240% in 2023.

Investors also looked toward minutes from the Fed's most

recent policy meeting, due on Wednesday, after multiple Fed

officials on Tuesday reinforced the stance that it would be best

for the central bank to exercise patience before starting to cut

interest rates.

"Investors are sort of just sitting on their hands for today

because there are two important things that will be coming out

tomorrow, Fed minutes combined with Nvidia ( NVDA ) earnings, so I don't

think people want to make any big bets ahead of that," said Sam

Stovall, chief investment strategist of CFRA Research in New

York.

He said the Fed was "still very much data-dependent and as a

result, they're going to do what the data tells them to do and

that's pretty much it, but Wall Street is going to continue to

forecast, ourselves included, that the Fed will start to cut

rates in September."

Markets are currently pricing in a 64.8% chance for a cut of

at least 25 basis points at the central bank's September

meeting, according to CME's FedWatch Tool.

According to preliminary data, the S&P 500

gained 13.96 points, or 0.26%, to end at 5,322.09 points,

while the Nasdaq Composite gained 38.51 points, or

0.23%, to 16,833.38. The Dow Jones Industrial Average

rose 74.87 points, or 0.19%, to 39,881.64.

The S&P 500 traded in a range of about 27 points on the

session.

Retailers were lower as a flurry of quarterly

reports from the group signals the winding down of earnings

season, with Lowe's shares ending lower after the home

improvement company warned of operating-margin pressure in the

current quarter.

Automotive parts retailer AutoZone ( AZO ) declined after a

third-quarter sales miss, weighing on the S&P 500 retail index

, which also lost ground on the day.

Macy's gained after the department store operator

raised its annual profit forecast, despite posting a

bigger-than-expected drop in sales for the first quarter.

JPMorgan Chase ( JPM ) rose, recovering some of Monday's

4.5% drop, helping fuel a climb in the S&P 500 banks index.

International Business Machines ( IBM ) advanced on plans to

release a family of artificial intelligence models as

open-source software and help Saudi Arabia train an AI system in

Arabic.