Tech Stocks Recover Ahead of Nvidia’s Report
U.S. stocks closed higher on Monday, August 24, 2026, as technology and semiconductor shares rebounded ahead of Nvidia’s highly anticipated quarterly earnings. The S&P 500 gained 0.6%, while the Nasdaq Composite rose 0.9%, led by a 2.3% advance in the PHLX Semiconductor Index. Investors shook off last week’s losses, focusing instead on the potential catalyst from Nvidia’s results due Wednesday, August 26.
The rebound came despite a cautious tone from the latest consumer confidence data. The Conference Board’s index fell to 98.7 in August from a revised 101.9 in July, marking the lowest reading since January. The decline was driven by rising concerns about the labor market and persistent inflation, adding to worries about the broader economy.
Lower Oil Prices and Yields Provide Relief
Falling crude oil prices and Treasury yields helped ease pressure on equities. West Texas Intermediate crude slipped 1.8% to $74.30 per barrel on Monday, while the 10-year Treasury yield dropped 6 basis points to 4.12%. Lower input costs for consumers and reduced borrowing costs for companies provided a supportive backdrop for risk assets.
The drop in yields was partly attributed to renewed expectations of a Federal Reserve rate cut. According to the CME FedWatch tool, traders now price in a 72% chance of a quarter-point cut at the September meeting, up from 65% a week ago. However, upcoming inflation data could alter those odds.
AI Spending and Valuation Concerns Persist
Nvidia’s earnings are expected to provide clarity on the sustainability of AI infrastructure spending. Analysts project the company to report revenue of $28.7 billion for its fiscal second quarter, up 112% year-over-year. The stock trades at 38 times forward earnings, above its five-year average of 30, reflecting elevated expectations.
Investors are also watching for any signs of a slowdown in AI-related capital expenditure from major cloud providers. Microsoft, Alphabet, and Amazon have collectively committed over $150 billion in AI infrastructure for 2026. A cautious tone from Nvidia’s management could trigger a broader tech selloff, given the sector’s heavy weighting in major indices.
PCE Inflation and Fed Commentary in Focus
Later this week, the Federal Reserve’s preferred inflation gauge, the core PCE price index, will be released on Friday, August 28. Economists expect a 0.2% monthly increase and a 2.6% annual rate, which would be in line with recent trends. A hotter-than-expected reading could dampen rate-cut hopes, while a cooler print might reinforce them.
Fed officials have been cautious in their public remarks. New York Fed President John Williams said on Monday that the central bank is “close to a point where we can begin to ease,” but added that “the data will guide us.” His comments follow similar statements from other policymakers, suggesting a balanced approach to monetary policy.
What Could Break the Rally
Nvidia’s guidance for the current quarter will be the key number to watch. If the company projects revenue above $30 billion, it could justify current valuations and push tech stocks higher. Conversely, any sign of cooling AI demand or margin pressure could trigger a correction.
The PCE report on Friday will also be pivotal. A surprise upside in inflation would likely push yields higher and pressure equities, while a benign reading could support further gains. Traders should also monitor Fed speeches for any shift in tone, as the September meeting approaches.
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