AI-Driven Rally Faces Crucial Test as Nvidia Earnings and Jackson Hole Loom

Nvidia's upcoming earnings report and the Federal Reserve's Jackson Hole symposium will put the stock market rally to the test, providing insight into whether the AI-driven surge in equities can withstand rising uncertainty over growth and interest rates.

The S&P 500 has fallen this week, with the index about 2% below its record high. Rising Treasury yields have fueled worries about borrowing costs, weighing on semiconductor stocks and dragging the Philadelphia chips index down around 5% for the week.

Nvidia's second-quarter results, scheduled to be released on August 26, could offer new insight into demand in the AI sector. The company has become a proxy for the broader ecosystem of chip makers and companies financing data center capacity expansion.

At Jackson Hole, investors will be looking for clues about the policy environment in which this expansion will take place. Fed Chair Kevin Warsh's first appearance at the symposium since taking office in May 2026 is expected to provide insight into his approach to monetary policy and how he intends to articulate a long-term strategy.

Markets are now pricing in a 35% chance of a September rate hike, with odds rising to 66% by December. The Treasury Department's efforts to calm markets have been met with only brief relief, with yields rebounding on Thursday and undoing much of the previous day's decline.