Nvidia's August 26 earnings report and the Federal Reserve's Jackson Hole symposium from August 27 to August 29 will test whether the AI-driven rally behind the S&P 500 can withstand surging bond yields. Nvidia carries a 7.6% weighting in the S&P 500, giving its results outsized influence over the broader index heading into the Fed event.
The S&P 500 sat about 2% below its record high this week, as surging Treasury yields pressured stocks tied to the AI trade. The Philadelphia Semiconductor Index dropped some 5% over the same stretch. Nvidia's second-quarter earnings on August 26 and the Fed's Jackson Hole symposium will now test whether the rally that has driven the index higher this year can hold.
Bond yields rattle the AI trade
Global bond yields surged this week, sending the 30-year Treasury yield to its highest level since 2007 and raising concerns over borrowing costs for companies financing AI infrastructure. The Treasury Department doubled buybacks for long-dated debt to calm markets, but the relief proved brief. Yields then rebounded Thursday, undoing much of the previous day's decline.
According to Reuters, David Wagner, head of equities at Aptus Capital Advisors, said "All eyes are going to be pointed towards Jackson Hole", pointing to the bond market's continued lack of clarity.
Nvidia's weight on the index
Nvidia reports second-quarter results on August 26, and the stakes reach beyond the stock itself. The company's $5.26 trillion market capitalization gives it a 7.6% weighting in the S&P 500, and it ranks second on Goldman Sachs' list of hedge funds' most important positions, behind Amazon. Nvidia recently teamed up with six major financial institutions on financing platforms targeting more than $500 billion for AI infrastructure, tying its results to a wider financing buildout.
Options traders are pricing a possible swing of plus or minus 5.3% for Nvidia's stock by the close of next Friday, a range of about $562 billion in market value.
What's priced for the Fed's next move
It will be Fed Chair Kevin Warsh's first Jackson Hole appearance since taking office in May 2026. Investors see the event as a chance for Warsh to lay out his approach to policy after stepping back from traditional forward guidance. He had already rattled markets when the July meeting gave few hints on how policymakers might respond if inflation stays stubbornly elevated.
July's personal-consumption-expenditures inflation data and a report on U.S. economic growth are due before the symposium. Markets are currently pricing a 35% chance of a September rate hike, rising to 66% by December.
Sources: Investing.com, MarketWatch
Trading involves risk.
Risk Disclaimer
