U.S. stocks ended a choppy session slightly lower on August 26, 2026, as rising bond yields and an upwardly revised inflation gauge offset stronger-than-expected consumer spending data. The S&P 500 ($SPX) fell 0.02%, the Dow Jones Industrial Average ($DOWI) lost 0.23%, and the Nasdaq 100 Index ($IUXX) slipped 0.10%, with investors turning cautious ahead of Nvidia’s (NVDA) earnings report after the close.
The pullback came as the 10-year Treasury yield climbed to 4.66%, pressured by an upward revision to the Q2 core PCE price index and stronger-than-expected personal income and spending figures. The data reinforced expectations that the Federal Reserve may need to raise interest rates again at its September 15-16 meeting, with futures markets now pricing in a 39% chance of a 25-basis-point hike.
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Inflation Data Points to Sticky Price Pressures
The Commerce Department reported that the July core PCE price index—the Fed’s preferred inflation gauge—rose 0.2% month-over-month and 3.3% year-over-year, matching expectations. However, the Q2 core PCE was revised upward to 3.6% from 3.4%, signaling that underlying price pressures were stronger than initially estimated.
At the same time, July personal spending rose 0.2% month-over-month, above the 0.1% forecast, and personal income grew 0.4%, double the expected 0.2%. The resilience of consumer demand, despite elevated borrowing costs, complicates the Fed’s path forward as it balances inflation risks against a still-solid labor market.
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“The upward revision to core PCE is a reminder that inflation is not yet vanquished,” said market analysts. “Combined with reliable consumer spending, it keeps a September rate hike firmly on the table.”
Nvidia Earnings: The AI Spending Bellwether
All eyes were on Nvidia’s fiscal Q2 results, released after the bell, as the chipmaker’s performance is widely viewed as the clearest signal of AI infrastructure demand. According to data compiled by Bloomberg, analysts projected Nvidia’s revenue to nearly double from a year earlier—the fastest pace in two years. Investors were also listening for CEO Jensen Huang’s commentary on capital spending by hyperscalers, future demand, and recent financing deals involving the company.
The stakes are high: AI infrastructure stocks are expected to contribute nearly 60% of the S&P 500’s earnings-per-share growth in Q2, according to Bloomberg Intelligence. With 86% of the 469 S&P 500 companies that have reported so far beating estimates, the market is counting on Nvidia to sustain the momentum.
“Nvidia’s results will determine whether the AI trade continues to lead the market or if we see a rotation,” said one strategist. “Any sign of discipline among hyperscalers could trigger a broader pullback in tech.”
Mixed Earnings and Oil Price Slide
Corporate earnings were mixed on the day. Intuit (INTU) tumbled more than 4% after issuing a weaker-than-expected full-year forecast, while J M Smucker (SJM) jumped over 3% after beating Q1 expectations and raising its 2027 outlook. Zoom Communications (ZM) fell 6% on a soft Q3 guidance, and Boston Scientific (BSX) dropped 4% after disclosing a cybersecurity incident.
In commodities, October WTI crude oil fell nearly 1% to a 1.5-week low, extending a weekly decline of more than 8% on signs of easing Middle East tensions. Reports of a potential maritime corridor through the Strait of Hormuz and the return of U.S. diplomats to the region suggested a de-escalation, easing supply concerns.
Overseas markets were firmer, with the Euro Stoxx 50 up 0.44%, China’s Shanghai Composite gaining 0.59%, and Japan’s Nikkei 225 adding 0.62%.
As the session closed, traders were bracing for Nvidia’s report and the Treasury’s $70 billion 5-year note auction, both of which could set the tone for the remainder of the week.
This article is for informational purposes only and does not constitute financial advice. Market conditions are volatile and unpredictable; always conduct your own research before making investment decisions.
