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Nvidia ( NVDA ) shares fall ahead of results; stock gains after the

bell

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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 0.51%, S&P 0.27%, Nasdaq 0.18%

(Updates to 5:20 p.m. ET)

By Chuck Mikolajczak

NEW YORK, May 22 (Reuters) - U.S. stocks fell on

Wednesday as investors digested minutes of the Federal Reserve's

most recent meeting but Nvidia's ( NVDA ) shares rose about 6% after the

close on the semiconductor bellwether's stronger-than-expected

revenue forecast.

The news also drove gains in other chipmakers.

Investors had focused on whether Nvidia's ( NVDA )

first-quarter results could meet sky-high expectations and

whether the outsized rally in artificial intelligence-related

stocks could be sustained.

Nvidia ( NVDA ) shares, which had closed weaker, 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 201.95 points,

or 0.51%, to close at 39,671.04, the S&P 500 lost 14.40

points, or 0.27%, to 5,307.01 and the Nasdaq Composite

dropped 31.08 points, or 0.18%, to 16,801.54.

Stocks struggled for direction for most of the session

but weakened after minutes of the Fed's meeting showed U.S.

central bank officials still had

faith price pressures would ease

, but slowly, due to disappointment over inflation readings.

The Fed's April 30-May 1 meeting followed three straight

months of data that showed sticky inflation, but before more

recent reports that showed price pressures could be cooling

again.

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 10.86% after

forecasting third-quarter revenue above expectations.

Energy was the worst performing sector, down

1.83% as oil prices fell for a third straight session.

Retailer Target ( TGT ) tumbled 8.03% after its quarterly

earnings and current-quarter forecast missed estimates.

TJ Maxx parent TJX gained 3.5% after raising its

annual profit forecast.

Declining issues outnumbered advancers for a 2.75-to-1 ratio

on the NYSE and a 1.5-to-1 ratio on the Nasdaq.

The S&P index recorded 47 new 52-week highs and six new

lows, while the Nasdaq recorded 120 new highs and 109 new lows.

Volume on U.S. exchanges was 12.86 billion shares, compared

with the 12.01 billion average for the full session over the

last 20 trading days.