Marketmind: Nvidia chipped while Fed minutes pass

A look at the day ahead in U.S. and global markets from Mike Dolan

It's a measure of sheer scale of tech-sector dominance that Wednesday's results from the most valuable chipmaker probably overshadows a readout on the Federal Reserve's most recent deliberations.

Either way, the keenly awaited quarterly update from artificial intelligence darling Nvidia and the minutes of the Fed's Jan 30-31 meeting will vie for most market attention later.

As the AI-infused trebling of Nvidia's stock price over the past year now makes it a top five market cap, jitters about whether its latest results can continued to meet a sky-high bar of expectations were largely responsible for the sharp retreat of Wall St benchmarks this week.

The S&P500 dropped 0.6% and the Nasdaq lost almost 1% on Tuesday and futures on both remain in the red premarket today.

Nvidia tumbled 4.35%, its biggest percentage fall since October, while the broader Philadelphia semiconductor index declined 1.56% as other chip stocks followed. And Nvidia is down another 2% premarket on Wednesday.

The retreat has been enough to whip-away the firm's newly-found third place ranking in top Wall St market caps, seeing slip back below Amazon and Alphabet again into fifth position. In a most mixed blessing, it has replaced Tesla as the Street's most-traded stock.

Investors seem concerned that Nvidia's results, expected after markets close on Wednesday, can justify its expensive valuation of a forward price-to-earnings ratio just above 32 - although that's not isolated, given the 'Magnificent 7' top caps as a whole are trading close to 35 times.

Nevertheless, it's a tough gallery to 'wow' after a 225% stock price increase over 12 months. Analysts expect earnings of $4.56 a share and revenue to rise to $20.378 billion from $6.05 billion a year earlier, according to LSEG estimates.

And the sudden cloud over the tech sector seems to go beyond Nvidia. Cybersecurity firm Palo Alto Networks plunged more than 20% overnight after it forecast third-quarter billings below Wall Street estimates, signalling more cautious spending by businesses in an uncertain economy.