US STOCKS-S&P 500, Dow close slightly up; market awaits Nvidia results

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Focus on Nvidia results due after the closing bell

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Palo Alto craters after Q3 billings forecast misses estimates

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Fed minutes show concerns about early rate cuts

(Updated at 4:00 p.m. ET/ 2100 GMT)

By Chuck Mikolajczak

NEW YORK, Feb 21 (Reuters) -

The S&P 500 and Dow Jones industrials eked out small gains on Wednesday, while the Nasdaq and Dow Industrials closed lower for a third straight session as investors looked toward the release of Nvidia's earnings that could determine the near-term momentum for equities.

Nvidia earnings are due after the closing bell. The chip designer's shares fell, adding to the previous day's decline of more than 4%.

The company's fourth-quarter revenue is expected to more than triple from the previous quarter's level on robust demand for its chips that dominate the market for artificial intelligence (AI).

Nvidia shares have soared nearly 40% this year, making it the biggest gainer on the S&P 500 after a leap of almost 240% in 2023. Analysts have cautioned that its lofty valuation could make the stock vulnerable to a sharp pullback if the company delivers anything short of a blowout report. This in turn could dampen enthusiasm over other AI-related stocks that have helped power the market rally off its October 2022 low.

"It's been driven by excitement and enthusiasm around AI and of course the AI darling in the room is Nvidia," said Jason Ware, chief investment officer at Albion Financial Group in Salt Lake City, Utah.

"Markets are looking at Nvidia with a little bit of anxiety, maybe, given that we have a market that's done so well and maybe in order to keep it going short term we need to see a good report from the leader in the space and that leader is Nvidia."

Unofficially, the S&P 500 climbed 0.13% to end the session at 4,981.82 points. The Nasdaq declined 0.32% to 15,580.87 points while the Dow Jones Industrial Average rose 0.12% to 38,611.72 points.

Minutes from the Federal Reserve's January meeting showed most policymakers were concerned about risks of cutting interest rates too soon, with broad uncertainty about how long borrowing costs should remain at their current level.

After the release of the minutes, traders of U.S. short-term interest-rate futures

stuck to bets

the Fed will begin cutting interest rates no earlier than June.

The heavily weighted technology index was the worst performing of the 11 major S&P sectors, while energy shares led gainers.

Wall Street's 2024 rally ran into turbulence last week after data hinted at sticky inflation, raising concerns the Fed would be in no hurry to cut interest rates.

The January inflation data complicates upcoming rate decisions, Richmond Fed president Thomas Barkin said.

Palo Alto Networks plunged after the cybersecurity firm forecast third-quarter billings below analyst estimates.

Shares of other cybersecurity companies such as Fortinet , Zscaler and Crowdstrike Holdings were also weaker.

Amazon.com edged up, with the company set to join the Dow Jones Industrial Average effective next week, replacing Walgreens Boots Alliance, which saw its shares decline.

(Reporting by Chuck Mikolajczak; Editing by David Gregorio)