FILE PHOTO: A trader works on the floor at the New York Stock Exchange (NYSE) in New York City, U.S., November 10, 2025. REUTERS/Brendan McDermid/File Photo
A smartphone with a displayed NVIDIA logo is placed on a computer motherboard in this illustration taken March 6, 2023. REUTERS/Dado Ruvic/Illustration

By Shashwat Chauhan and Twesha Dikshit

(Reuters) -Wall Street's main indexes inched higher on Wednesday following a sharp sell-off earlier in the week, as investors set their eyes on Nvidia's earnings that could prove to be a make-or-break moment for the AI trade.

Nvidia's earnings, due after markets close on Wednesday, are seen as a litmus test for the AI-driven rally that has pushed markets to record highs this year.

The rising market has recently come under scrutiny on doubts around monetization of the technology, circular spending within the industry and high debt levels at tech companies to fund AI investments.

Options data from analytics firm Option Research & Technology Services (ORATS) showed an implied move of about 7% for Nvidia's stock in either direction after its results.

Shares of the AI giant gained 2.3% after falling about 4.6% in the last two sessions.

Most megacap and growth stocks were mixed, though Alphabet outperformed with a 5% jump.

"We may have a little more back and forth that investors have been primed for this whole year to buy the dip and we certainly have had pretty big dips," said Melissa Brown, SimCorp's managing director of investment decision research.

"At least for now, some of these high flying names may still get support as investors view the current prices as more attractive"

Worries over high valuations and dwindling expectations of a December interest rate cut have weighed on the markets of late, with the S&P 500 recording its fourth consecutive day of losses on Tuesday.

As of the S&P 500's last close, the U.S. benchmark has dropped nearly 4.4% from its October peak and stands 12.5% higher on a year-to-date basis.

Seven of the 11 S&P sub-sectors were trading higher, though energy lagged with a 2.1% drop as oil prices dropped following a report of a U.S. proposal to end the Russian war in Ukraine.

At 9:43 a.m. ET the Dow Jones Industrial Average rose 6.58 points, or 0.01%, the S&P 500 gained 28.31 points, or 0.43%, and the Nasdaq Composite gained 160.30 points, or 0.72%.

Lowe's advanced 3.2% after the home improvement retailer posted third-quarter profit above expectations. TJX rose 0.3% as the TJ Maxx parent raised annual forecast with deal-focused shoppers driving demand.

Big-box retailer Target dropped marginally after reporting a bigger-than-expected drop in quarterly sales with cash-strapped U.S. consumers pulling back on discretionary spending. Rival Walmart is scheduled to report later this week.

The S&P 500 and the Nasdaq both closed below their 50-day moving averages earlier this week - an important technical threshold - for the first time since late April.

Later in the day, minutes from the Fed's October policy meeting - where the central bank cut rates by 25 basis points - are on investors' radar. On Thursday, the September U.S. jobs report would be in focus.

Among other moves, Unity Software shares added 6.8% after announcing a partnership with Epic Games to bring its games to gaming platform Fortnite.

Declining issues outnumbered advancers by a 1.23-to-1 ratio on the NYSE and by a 1.03-to-1 ratio on the Nasdaq.

The S&P 500 posted eight new 52-week highs and 13 new lows, while the Nasdaq Composite recorded 21 new highs and 86 new lows.

(Reporting by Shashwat Chauhan and Twesha Dikshit in Bengaluru; Editing by Krishna Chandra Eluri and Maju Samuel)