Stocks fell Tuesday as Nvidia led a broader tech decline ahead of the chipmaker's earnings report.

The Dow Jones Industrial Average dipped 64.19 points, or 0.17%, settling at 38,563.80. The S&P 500 slipped 0.60% to end at 4,975.51. The tech-heavy Nasdaq Composite lost 0.92% to close at 15,630.78.

Shares of Nvidia, which is set to report earnings Wednesday after the bell, fell nearly 4.4%. Although Nvidia is expected to post impressive results, investors have expressed concerns about its sky-high valuation. Amazon shares declined 1.4%, while shares of Microsoft and Meta each lost about 0.3%.

"With technology now trading at close to 30x forward estimates, that seems to be a ceiling for the tech sector. Makes it pretty hard for additional PE multiple expansion," said Sam Stovall, chief investment strategist at CFRA Research. "What investors have to wait on is for earnings to come in better-than-anticipated so that the 2024 and 2025 estimates end up being improved."

So far this year, the technology sector has added 6%, making it the third-highest gainer in the broader market, losing to communication services and health care. Nvidia has continued its blockbuster stretch of gains, adding 40% so far this year, while its 'Magnificent 7' peers have risen. Meta and Amazon have advanced about 33% and 10%, respectively, in 2024.

Financial stocks were also in view Tuesday following a blockbuster announcement that Capital One Financial agreed to purchase Discover Financial Services in an all-stock deal worth $35.3 billion, which is expected to close in late 2024 or early 2025. Capital One added 0.1% following the announcement, while Discover jumped 12.6%.

In separate deal news, Walmart announced it will acquire TV maker Vizio for $2.3 billion, or $11.50 a share, leading shares of Vizio to climb by about 16%. Walmart shares added more than 3% after the big-box retailer also beat quarterly earnings and revenue expectations, fueled by double-digit growth in the company's global e-commerce sales.

The moves follow a losing week on Wall Street after economic data raised concerns that the Federal Reserve may not begin cutting interest rates as soon, or by as much, as market participants expected this year.

Tuesday kicks off the shortened trading week after U.S. markets were closed Monday in observance of the birthday of George Washington.

Stocks close lower on Tuesday

Here's how the major indexes closed:

• The S&P 500 shed 0.6% to 4,975.51.
• The Dow Jones Industrial Average dropped 64.19 points, or 0.17%, to 38,563.80.
• The Nasdaq Composite lost 0.92% to 15,630.78.

— Pia Singh

Goldman raises S&P 500 target to 5,200

Goldman Sachs raised its S&P 500 year-end target to 5,200 in anticipation of stronger-than-expected earnings — especially in megacaps.

"We raise our year-end S&P 500 index target to 5200 (from 5100), representing 4% upside from the current level," David Kostin, chief U.S. equity strategist at Goldman Sachs, wrote in a note late Friday. "Our target upgrade today reflects an improved earnings outlook."

CNBC Pro subscribers can read the full story here.

— Sarah Min

Recent market pullback 'no surprise,' says Oppenheimer's Stoltzfus

The S&P 500 and Nasdaq Composite posted losses last week, marking just the second time the indices have closed in the red in 16 weeks. However, Oppenheimer chief investment strategist John Stoltzfus doesn't believe this means the market's rally has come to a stop.

"That the market slipped some from its high perch last week after spectacular bull run from the end of last October should have come as little or no surprise after two gauges of inflation ran hotter in January than what had been expected in surveys that measured market participant opinions," Stoltzfus wrote in a Tuesday note.

Although the economic data "may well serve to pump the brakes some on the recent spate of day to day bullishness that's pushed stocks higher day to day this year, we do not expect them to slam the breaks on the positive progress the markets have made from 2023 through the early part of this year," Stoltzfus added.

The strategist believes the hotter-than-expected data will instead prevent investors and traders from taking the market's positive progress for granted.

— Hakyung Kim

Strength in consumer staples helps offset market weakness

Wall Street is off to a rough start to the week, but defensive-minded consumer staples stock are holding up their end of the bargain.

The Consumer Staples Select Sector SPDR Fund (XLP) was up 1.1% in afternoon trading. The sector is the best performer on the day, followed by utilities, according to FactSet.

Walmart's post-earnings rally is one part of the outperformance, as the stock is the fifth biggest holding in the XLP.

But other major consumer staples stocks are also positive on the day. Coca-Cola was up 2.4% in afternoon trading, while Procter & Gamble rose 1%.

— Jesse Pound

UBS hikes its S&P 500 target to 5,400

UBS just raised its S&P 500 year-end target to the highest among major Wall Street banks: 5,400. The new target is 8% above Friday's close.

"Despite our bullish outlook, it appears we were not bullish enough," Jonathan Golub, chief U.S. equity strategist at UBS, said in a note.

CNBC Pro subscribers can read the full story here.

— Sarah Min

U.S. crude pulls back more than 1% after hitting three-month high last week

U.S. crude oil futures pulled back Tuesday after hitting a three-month high last week as the conflict in the Middle East raged on.

The West Texas Intermediate contract for March fell $1.01, or 1.28%, to settle at $78.18 a barrel. The Brent contract for April dropped $1.22, or 1.46%, to $82.34 a barrel. There was no WTI settlement on Monday due to the President's Day holiday.

U.S. crude gained 3% last week to settle Friday at its highest price, $79.19 a barrel, since Nov. 6. The global benchmark rose 1.5% for the week to settle at its highest price since Jan. 26.

Robert Thummel, senior portfolio manager with Tortoise Capital, said prices likely pulled back Tuesday due in part to traders taking profits after WTI booked a solid run so far this month.

Crude futures gained last week on the conflict in the Middle East after Israel launched strikes in Lebanon and vowed to press on with its offensive in Gaza to the southern city of Rafah.

Houthi militants on Monday attacked another cargo ship in the Bab el-Mandeb strait, forcing the crew to abandon the vessel. The Iran-allied militants claimed they caused "catastrophic damage" to the ship.

— Spencer Kimball

Discover shares surge 14% on the back of merger deal

Shares of Discover Financial Services jumped 14.3% Tuesday, leading the stock to a new 52-week high and making it the S&P 500's biggest gainer.

The rally comes a day after Capital One announced it would acquire Discover in a $35.3 billion all-stock deal.

— Hakyung Kim

Nvidia heads for worst daily performance since May 2023

Nvidia led the broader tech decline during Tuesday's trading session.

The chipmaker giant has already rallied 38% in 2024. But Tuesday saw the stock erasing some of its gains, with shares of Nvidia sliding 6% by mid-afternoon. This would mark the worst day for Nvidia since May 31, 2023, when it declined 5.68%.

Nvidia is set to report its latest earnings Wednesday after the bell.

— Lisa Kailai Han

These are the stocks moving the most midday

Here are some of the companies making the biggest moves during midday trading:

• Semiconductor stocks — Popular semiconductor stocks declined during midday trading, with Nvidia dropping more than 6% ahead of its Wednesday print. Super Micro Computer shed nearly 10% even after Rosenblatt issued a price target at a Street high. 
• Walmart — Shares climbed more than 3% and notched a new all-time high Tuesday following the retailer's earnings report. Walmart beat expectations for its holiday quarter and announced its purchase of TV maker Vizio. Vizio shares surged about 15%.
• Discover Financial — Shares of the credit card issuer soared 14% after it agreed to be acquired by Capital One Financial in a $35.3 billion all-stock deal. Capital One shares were little changed.

Read the full list of stocks moving here.

— Samantha Subin

Capital One acquisition of Discover Financial could take longer than expected, says Raymond James

The Capital One – Discover merger announced Monday could encounter some hurdles, according to Raymond James.

"This deal is much larger than any of our DC contacts have been telling us is possible for regulatory approval in the current DC climate, especially after the bank panic of last March. The press release provides a deal close of 4Q24 or early 2025 – this appears to be an aggressive timeline," said Ed Mills, managing director and Washington policy analyst at Raymond James.

Upcoming updates from the Office of the Comptroller of the Currency and the Department of Justice regarding merger guidelines for banks could be another headwind for the acquisition, Mills added.

— Hakyung Kim

El-Erian says last mile of inflation falling to 2% is bumpy

Widely followed economist Mohamed El-Erian believes that the last mile of getting the inflation rate to the Federal Reserve's target of 2% will be bumpy.

"People realize that there's a limit to goods deflation, goods prices actually coming down. And service inflation stays sticky, which means that getting to 2% is going to be tricky," El-Erian said Tuesday on CNBC's "Squawk Box."

The Allianz chief economic advisor and president of Queens' College, Cambridge, believes that the central bank will cut interest rates three times starting in June, and he said it wouldn't surprise him if there are only two reductions.

— Yun Li

Leading indicators fell more than expected but no longer point to recession

The Conference Board's Leading Economic Index dropped 0.4% in January, more than expected, as hours worked fell and the spread between bond yields widened, the organization reported Tuesday.

Though the decline was more than the 0.3% estimate from Dow Jones, the board noted that six of the 10 data points used in the index were positive for the month, an important benchmark for a metric that long had been flagging an economic contraction.

"As a result, the leading index currently does not signal recession ahead. While no longer forecasting a recession in 2024, we do expect real GDP growth to slow to near zero percent over Q2 and Q3," said Justyna Zabinska-La Monica, senior manager of Business Cycle Indicators at The Conference Board.

The index looks at stock prices and bond spreads, along with housing, manufacturing and employment data.

— Jeff Cox

Walmart helps Dow pare losses

Losses for the Dow were smaller relative to the other major averages due to a post-earnings rally from Walmart.

The blue-chip average traded slightly below flat at around 10 a.m. ET. Meanwhile, the broad S&P 500 shed 0.5% and the technology-heavy Nasdaq Composite dropped 1.1%.

The 30-stock Dow was able to curb losses in part from a rally of nearly 6% in Walmart, which propelled the stock to a new all-time high. The retailer beat expectations for its holiday quarter and said it would buy TV maker Vizio as part of its expansion of its advertising business.

Coca-Cola, Procter & Gamble and Merck also helped the index, with each up more than 1%.

Those gains mostly offset losses seen elsewhere. Caterpillar was the worst performer with a drop of nearly 2%, followed by Disney down 1.7%.

— Alex Harring

Semiconductor stocks drop

Semiconductor stocks dropped Tuesday, with Nvidia slumping 5% ahead of its quarterly print after the bell Wednesday.

Advanced Micro Devices and Applied Materials also shed about 5% each. Monolithic Power declined at least 3%, while Broadcom, Marvell Technology and Lam Research shaved off at least 2%.

The declines come amid what has been a strong start to the year for the sector. The VanEck Semiconductor ETF fell nearly 3% during Tuesday's session, but is up more than 12% year to date.

— Samantha Subin

Stocks open lower on Tuesday

Stocks kicked off the shortened trading week in the red.

The S&P 500 opened 0.3% lower, while the Dow Jones Industrial Average lost 80 points, or 0.2%. The Nasdaq Composite edged lower by 0.5%.

— Pia Singh

Stocks making the biggest moves premarket

Check out some of the companies making headlines during premarket trading.

• Home Depot — Shares slipped about 2.5% after the retailer beat its fiscal fourth-quarter estimates on the top and bottom lines, but issued lower-than-expected guidance. The company forecast full-year revenue growth of 1%, while analysts polled by FactSet expected 1.6%. Net income and sales also fell throughout the quarter.

• Super Micro Computer — Stock in the information technology company climbed more than 2% after Rosenblatt nearly doubled its price target, calling for 62% upside moving forward. Rosenblatt's price target is now the highest forecast for the stock on Wall Street.

• Walmart — Shares added about 3% after the retail giant reported fourth-quarter adjusted earnings of $1.80 per share, beating the $1.65 expected from analysts polled by LSEG, formerly known as Refinitiv. Revenue also topped expectations. In addition, Walmart announced it would acquire TV maker Vizio for $2.3 billion.

Read the full list here.

— Brian Evans

Walmart beats on earnings and revenue

Walmart shares rose 2% during premarket trading after the retail giant reported an earnings and revenue beat for the fourth quarter.

Adjusted earnings per share came in at $1.80, topping the $1.65 expected from analysts polled by LSEG, formerly known as Refinitiv. Revenue came in at $173.39 billion versus the consensus estimate of $170.71 billion.

Walmart also announced it would acquire smart TV maker Vizio for $2.3 billion to help propel growth in its advertising business.

— Melissa Repko, Michelle Fox

Home Depot earnings beat estimates, but shares fall

Home Depot reported better-than-expected earnings and revenue for the fourth quarter despite consumers taking on smaller projects at home.

The company earned $2.82 per share on revenue of $34.79 billion. Analysts polled by LSEG, formerly known as Refinitiv, expected a profit of $2.77 per share on revenue of $34.64 billion.

Chief Financial Officer Richard McPhail said demand for home improvement dipped throughout 2023 but noted that, "Our market is on its way back to normal demand conditions."

Shares were down 2% in the premarket.

— Fred Imbert

Capital One to acquire Discover in $35.3 billion all-stock deal

Capital One Financial is set to acquire Discover Financial Services in a $35.3 billion all-stock deal, the companies announced late Monday.

The companies said they expect the deal to close in late 2024 or early 2025, after which Capital One shareholders would hold 60% and Discover shareholders would own 40% of the combined company.

The merger of the two companies, which are among the largest credit card issuers in the U.S., would expand Capital One's credit card offerings and its deposit base. The company bought digital concierge service Velocity Black, a premium credit card and luxury market platform, in June of last year.

— Hakyung Kim, Christine Wang

Stocks come off losing week

Traders have to look beyond a negative week that snapped a winning streak.

The technology-heavy Nasdaq Composite dropped more than 1.3% last week, while the broad S&P 500 lost about 0.4%. The 30-stock Dow shed just 0.1%, pointing to mitigated losses among blue-chip names.

With those moves, the three indexes all snapped five-week winning streaks.

Tuesday marks the beginning of the holiday-shortened trading week, with U.S. markets dark on Monday in observance of George Washington's birthday.

— Alex Harring

S&P 500 and Dow futures are near flat

Futures connected to the S&P 500 and Dow were both little changed shortly after 6 p.m. ET Monday night. Nasdaq 100 futures inched higher by 0.2%.

— Alex Harring