U.S. stocks encountered a downturn on Tuesday, signaling a temporary pause in the positive momentum seen in November. The expectation of Nvidia’s (NVDA) earnings report, a notable figure in the AI chip sector, along with the impending release of Federal Reserve minutes, added to a prudent sentiment in the market.

In the midst of mid-morning trading, the S&P 500 (^GSPC) witnessed a decline of approximately 0.4%, stepping back from its recent peak in August. Correspondingly, both the Dow Jones Industrial Average (^DJI) and the Nasdaq Composite (^IXIC) recorded decreases, with declines of approximately 0.3% and 0.9%, respectively.

The disappointment in retail earnings added to the market’s cautious sentiment. Shares of prominent companies such as Lowe’s (LOW), Best Buy (BBY), American Eagle Outfitters (AEO), and Kohl’s (KSS) registered declines on Tuesday. A significant decline in consumer spending played a role in these setbacks, fostering uncertainties in financial predictions and affecting overall sales.

Attention now turns to Nvidia’s quarterly report, expected to shed light on the fundamental factors propelling the ongoing AI hype cycle. Nvidia’s stock achieved a record high in the previous trading session, underscoring its prominence in the AI narrative of 2023. The market is anxiously awaiting the outcomes, particularly following the recent earnings report from the company that triggered a noteworthy surge in stock prices.

In addition to Nvidia, the spotlight remains on the unfolding drama involving OpenAI. Microsoft’s (MSFT) CEO indicated openness to the potential return of Sam Altman, the former CEO of OpenAI, to the ChatGPT maker. Microsoft’s shares exhibited stability in early Tuesday trading, following a record-setting session on Monday, as the tech giant’s strategic move is perceived to enhance its AI prospects. This strategic maneuver could be advantageous, particularly if it leverages a possible departure of OpenAI employees in pursuit of new opportunities.

Investors are also eagerly awaiting the release of minutes from the Federal Reserve’s latest rate-setting meeting. This comes amid an ongoing debate within financial circles about whether the optimism surrounding potential rate cuts, a driving force behind the recent stock rally, may be excessive. With a week shortened by the holiday and limited economic data anticipated, these minutes will undergo careful examination for any signals regarding policymakers’ viewpoints and potential forthcoming decisions.