TradingKey Daily Market Briefing: Nvidia Earnings Beat Expectations, Strong PCE Inflation Weighs on Market Sentiment as Focus Turns to Jackson Hole Meeting

Tracking Market Trends

TradingKey - On August 26, Eastern Time, the three major U.S. stock indices closed slightly lower. U.S. July PCE inflation data came in slightly strong, reinforcing market concerns that the Federal Reserve will maintain high interest rates or even raise them further; meanwhile, investors remained cautious ahead of Nvidia's earnings release, and AI and tech stocks overall lacked a clear direction. A continued pullback in oil prices eased some inflationary pressure, but a rising U.S. dollar and Treasury yields continued to weigh on risk assets and precious metals.

At the close, the Dow Jones Industrial Average fell 0.21% to 53,469.36; the S&P 500 Index slipped 0.02% to 7,675.70; and the Nasdaq Composite Index declined 0.08% to 26,130.20.

In terms of sectors and individual stocks, AI and tech stocks showed mixed performance. Nvidia (NVDA) fell 1.59% ahead of its earnings report, reflecting pressure from high investor expectations regarding AI chip demand, gross margin, and future guidance. Meta (META) and Apple (AAPL) both rose over 1%, helping the tech sector partially offset the pressure from Nvidia. Intuit (INTU) dropped 3.24%, mainly impacted by a weak annual revenue outlook.

In commodities, crude oil rebounded on Wednesday after dropping sharply on Tuesday. WTI crude (USOIL) rose nearly 1% to $81.90, while Brent crude (UKOIL) gained 0.86% to $86.69. The recent weakness in oil prices was mainly due to ongoing negotiations between Iran and Oman regarding navigation arrangements in the Strait of Hormuz, which eased market concerns over Middle East energy transit disruptions. However, blacklisted Iranian vessels, declining transit volumes through the Strait of Hormuz, and U.S. economic pressure on Iran mean that energy risks have not been fully eliminated.

In precious metals, gold (XAUUSD) pulled back noticeably. Spot gold fell 1.38% to $4,594.71. Following the release of the U.S. PCE data, a stronger U.S. dollar and rising Treasury yields dragged gold down from its previous high. Although Middle East geopolitical tension and U.S. fiscal issues continue to support gold prices in the medium-to-long term, profit-taking pressure near $4,700 has increased significantly in the short term.

In the crypto market, Bitcoin (BTCUSD) continued to fluctuate around $78,000. As the U.S. dollar and Treasury yields rebounded, Bitcoin came under pressure alongside gold. Although the market remains focused on U.S. Treasury bond buybacks, ETF inflows, and the hedging logic against currency debasement, short-term volatility may continue to amplify following the PCE data and Nvidia's earnings report.

Market News

Nvidia earnings beat expectations as AI chip demand remains strong. Nvidia reported its earnings report after the bell, with second-quarter revenue reaching $96.22 billion, exceeding market expectations of $92.17 billion; adjusted earnings per share were $2.22, also above market expectations. The company expects third-quarter revenue to be approximately $108 billion, also higher than analysts' average expectation. Data center revenue reached $89 billion, demonstrating that demand for GPUs from major cloud providers and AI infrastructure customers remains strong. The company also announced an expanded partnership with Amazon AWS, which will deploy an additional 2 million Nvidia GPUs between 2027 and 2028. Following the earnings release, Nvidia's after-hours stock price rose over 4% at one point.

U.S. July PCE inflation comes in strong, prompting markets to reassess Fed policy path. Data from the U.S. Department of Commerce showed that the PCE price index rose 3.7% year-over-year in July, remaining significantly above the Federal Reserve's 2% target. Following the release of the PCE data, market bets on a September rate hike warmed up slightly, but the overall pricing landscape continues to reflect a mix of a rate hike and holding steady. Moving forward, investors will focus on Federal Reserve Chair Warsh's speech at the Jackson Hole symposium, particularly his latest assessment of inflation, oil prices, fiscal pressures, and long-term interest rates.

Oil prices continue to slide as Strait of Hormuz talks ease supply concerns. Iran and Oman are conducting negotiations regarding navigation arrangements in the Strait of Hormuz, prompting the market to reprice Middle East energy transit risks. Reuters reported that Brent crude and WTI crude fell significantly in the previous trading session, as investors believed diplomatic talks could reduce the probability of a long-term blockade of the strait. However, some oil companies and refiners are still avoiding blacklisted Iranian vessels, indicating that shipping security and insurance cost issues have not been fully resolved.

Jackson Hole symposium reaches a critical juncture; Warsh's speech may shape September market expectations. Federal Reserve Chair Warsh is set to deliver a speech at the Jackson Hole Economic Symposium. As he has emphasized reducing forward guidance and relying more on real-time data since taking office, this speech holds even greater significance for the market. If Warsh continues to emphasize inflation risks and energy price pressures, the U.S. dollar and U.S. Treasury yields could strengthen further; if he acknowledges an economic slowdown or consumer pressures, tech stocks, gold, and Bitcoin could receive temporary support.

Kioxia plans new production facility in northern Japan as AI memory expansion gains momentum. Memory chipmaker Kioxia Holdings plans to build a new production facility at its plant in northern Japan to expand memory chip capacity. As demand for AI servers, enterprise SSDs, and high-performance memory continues to grow, the importance of the NAND flash memory and advanced storage supply chain has risen further. Previously, Kioxia and SanDisk launched production of 10th-generation 3D flash memory at the Kitakami plant in Kitakami, Iwate Prefecture, Japan. If the new facility progresses smoothly, it will further strengthen Kioxia's supply capability in the AI memory cycle, while also signaling that global memory manufacturers are expanding capacity ahead of time for the next phase of AI computing demand.

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