The S&P 500 rose around 0.2% on August 25 as tech stocks recovered from Monday's selloff, but the rally now faces two tests: Nvidia's earnings on Wednesday and fresh inflation data. Options markets price a swing worth roughly $280 billion in Nvidia's market value alone.
Technology shares led Tuesday's rebound, with Nvidia, Meta, Intel, Micron, Western Digital and AMD all trading higher after semiconductor stocks sold off a day earlier. AMD alone gained around 5% on an upgrade from Raymond James. The bigger question is whether that bounce holds once Nvidia reports and inflation data lands.
Nvidia earnings could move $280 billion in value
Nvidia reports after the close on Wednesday, August 26, and options markets are pricing an approximately 5.4% move in the stock. At its current size, that implies roughly $280 billion in market capitalization shifting in either direction. It is still smaller than the average post-earnings move of approximately 7.4% over Nvidia's last 12 quarters. Analysts expect revenue to reach roughly $92 billion, almost double the year-earlier period, with data-center sales again driving most growth.
Nvidia's size means its results can shift the broader S&P 500 on their own. Nvidia itself is up around 12% in 2026, roughly matching the S&P 500. The Philadelphia Semiconductor Index has gained approximately 61% this year, a gap that shows the AI trade has broadened beyond Nvidia and raises the risk that a disappointing report triggers selling across chipmakers that may not even have direct exposure to Nvidia's own results.
Inflation data adds a second test
Markets are also waiting on the latest Personal Consumption Expenditures data, the gauge the Federal Reserve watches most closely against its 2% target. Core PCE has stayed above that target for an extended period, and persistent inflation limits the Fed's room to ease policy — a pressure that can be particularly sensitive for growth companies with profits expected far into the future.
Treasury yields have already demonstrated how quickly they can pressure equity valuations. The 30-year yield reached levels not seen since 2007 earlier this month before easing. On August 25, the 10-year yield fell toward 4.65%, partly after Treasury Secretary Scott Bessent announced expanded buybacks of longer-duration securities. That relief could reverse quickly if inflation surprises to the upside.
Earnings still underpin the rally
Corporate earnings remain the market's main support. Most S&P 500 companies have already reported, leaving Nvidia among the last major releases, and UBS Global Wealth Management recently raised its year-end S&P 500 target to 8,100, implying roughly 6% upside from the index near 7,641 at the time of the forecast.
Not every part of the economy looks as strong, however. Walmart reported its slowest quarterly comparable-sales growth in six years. Dick's Sporting Goods fell about 28% on Tuesday after cutting its outlook, underscoring a split between resilient tech earnings and softer consumer spending.
For the S&P 500, the next 48 hours narrow down to two questions: can Nvidia's guidance justify the AI trade's valuations, and can PCE inflation cool enough to keep the Fed from becoming a bigger obstacle.
Source: Crypto Daily
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