Nvidia stock price is falling! Here’s what I think will happen next for the S&P 500

Before the market opens, Nvidia (NASDAQ:NVDA) shares of the company fell 3% after the company reported its latest quarterly results. Given that it has one of the largest individual impacts on the movement of the S&P 500Here’s what I think could be in store for the index between now and the end of the year.

Details behind the results

The move so far this morning (November 21st) really interests me for a few reasons. Nvidia results exceeded market expectations. Sales reached $35.08 billion, significantly exceeding the forecast of $33.16 billion. Even on the bottom line, adjusted earnings per share exceeded expectations of $0.75 and reached $0.80. As a reminder, this was the eighth consecutive quarter in which Nvidia beat Wall Street forecasts.

Despite this strong performance, the stock fell immediately afterwards. I think this is because the pace of growth is starting to slow. For example, year-over-year sales growth was 94%. This may sound unbelievable, but let’s put things into perspective. Sales growth in the previous quarter compared to the comparable period in 2023 was 122%. The increase was 262% in the previous quarter and 265% in the previous quarter.

So, the slowing growth rate is a point that has given investors pause. Another reason for the share price reaction is investor sentiment. While the results were great, investors were clearly expecting something even more amazing. In other words, the bar was set so high that unfortunately people would be disappointed with almost anything released!

Implications for the index

Nvidia shares are up 190% in the past year. Given the company’s size, it certainly helped the S&P 500 index gain 30% over the same period.

In the short term, I think the index could falter. The move following Nvidia’s earnings will likely cause investors to pause and take a breath from the rally. Do things need to be recalibrated? Is the price-earnings ratio too high? Can the company continue to exceed expectations next year? These are some likely points to consider.

From my perspective, I don’t see this as the start of a major correction in the S&P 500 or Nvidia stock. But I think it will slow the index and push it significantly higher at the end of the year. This is due to the fact that some traders and investors may look to reduce their risk until Thanksgiving, while others choose to remain idle until January.

Looking ahead to 2025, I think the S&P 500 will continue to rise, but other sectors will be the main drivers. For example, I believe US stocks will fall given the new presidency Tesla will surpass. Based on this, I will not be buying Nvidia at this time.